GIC vs High-Interest Savings Account Calculator
Compare what a GIC and a high-interest savings account leave you with after tax, over the months you choose. It handles promo rates that expire and cashable versus locked-in terms. The headline is the dollar difference and the date your money is locked until.
| GIC 3.6% | HISA 2.6% | |
|---|---|---|
| Interest earned | $900.00 | $657.80 |
| Tax on interest (29.6%) | − $266.85 | − $195.04 |
| Value after 12 months | $25,633.15 | $25,462.76 |
| Left in chequing instead | $25,008.80 | |
| HISA rate needed to match the GIC | 3.54% |
Show the math
GIC: compounded yearly at 3.6%. HISA: interest worked out monthly at 2.6%. In a regular account, interest is taxed at your marginal rate (29.6%, from $80,000 in Ontario) at the end of each year, and the tax is paid out of the account. The break-even is the flat HISA rate that ends with the same after-tax value. Both are CDIC-insured up to $100,000 per category at member institutions.
How this calculator works
Both accounts start with the same deposit. The GIC compounds once a year at its rate. The savings account compounds monthly at its rate. In a taxable account, each year’s interest is taxed at your marginal rate and the tax is paid from the account, as happens when you pay your tax bill. In a TFSA or RRSP no tax is taken.
The break-even savings rate is the HISA rate that would end the term with the same after-tax value as the GIC.
Worked example: $25,000 for 2 years, 4% GIC vs 3.25% HISA, Ontario at $80,000 income
| Line | GIC | HISA |
|---|---|---|
| Interest earned | $2,028.14 | $1,668.57 |
| Tax at 29.65% | − $601.34 | − $494.73 |
| After tax | $26,426.80 | $26,173.84 |
| HISA rate needed to match | 3.93% |
Assumptions
- The HISA rate stays the same for the whole term. In practice it moves with the Bank of Canada rate.
- Tax is paid each year from the account. Interest is fully taxable at the marginal rate the calculator derives from your income and province.
- No early redemption of the GIC.
Common questions
Frequently asked questions
- Is a GIC or a high-interest savings account better?
- A GIC pays a fixed, usually higher rate but locks the money for the term. A HISA pays a variable rate and stays accessible. If you will not need the money before the term ends, and the GIC rate beats the HISA rate by more than the compounding difference, the GIC earns more. If the after-tax gap is small, the savings account's flexibility usually wins.
- How is GIC interest taxed?
- As ordinary income at your full marginal rate, every year it accrues, even on a compound GIC that pays at maturity. The CRA requires annual accrual reporting for GICs longer than a year. In a TFSA it is tax-free. In an RRSP it is deferred.
- Are GICs and savings accounts insured?
- Yes, at CDIC member institutions, up to $100,000 per depositor per insured category, for deposits and GICs of up to five years. Non-registered, TFSA and RRSP are separate categories. Credit unions are covered by provincial insurers, some with unlimited coverage. Check before you deposit more than $100,000 in one place.
- What is a cashable GIC?
- A GIC you can redeem early, usually after 30 to 90 days, at a lower rate than a non-redeemable GIC. It sits between a HISA and a locked-in GIC in both flexibility and yield.
- Does a GIC compound?
- Compound GICs reinvest interest once a year. Simple-interest GICs pay it out. Most HISAs calculate interest daily and pay monthly. That is why a HISA at the same headline rate earns slightly more than an annual-compound GIC.
- Should I hold interest in my TFSA?
- Interest is taxed harder than any other return, so it gains the most from sheltering. Many people hold GICs and HISAs in the TFSA and equities outside. But equities have more growth to shelter over long periods.
- How are HISA promo rates counted?
- A promo rate applies for a few months and then drops to the regular rate. The calculator blends both into one effective rate for your term, often well below the advertised number. 5% for 3 months then 2.5% is about 3.1% over a year.
Tax-saving strategies that use this calculator
- Capital-loss harvesting and the superficial-loss rule (Canada, 2026)Sell a losing investment to cancel capital gains. Carry the loss back three years or forward for good. Watch the 30-day superficial-loss rule.
- Prescribed-Rate Spousal Loans (2026)Lend money to a lower-income spouse at the CRA prescribed rate (3% for Q4 2026), pay the interest by January 30, and the income is taxed as theirs.
Sources
Sources
Every figure on this page comes from one of these primary sources. Data last verified .
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