In Canada, a certificate of deposit (CD) is more commonly known as a term deposit. Another specifically Canadian banking term that is relatively synonymous is guaranteed investment certificate (GIC). This is a broader nomenclature that can refer to traditional individual term deposits with fixed interest rates, or to market-indexed investments where the interest rate is determined by stock market growth.
CDs obtained from banks are protected by the Canadian Deposit Insurance Corporation (CDIC). The deposit is insured if the financial institution is an accredited member, the deposit is in Canadian currency and the term deposit is not more than five years. Credit unions, more widespread in Canada, also offer CDs but are not insured by CDIC. They have their own deposit insurance arrangements based on provincial laws.
Interest Rate Factors
The two basic factors that determine interest rate are the initial principal amount and the length of time it will be deposited. Generally, the interest rate increases as the principal amount and duration of deposit increases. Another thing to bear in mind is that smaller financial institutions such as credit unions tend to offer higher interest rates than larger ones such as banks. A personal CD account also usually gets higher interest than a business CD account.
Less Than a Year
For the one-month term deposit, the Ontario Civil Service Credit Union offers the highest at 1.05 percent and is closely followed by Comtech Credit Union at 1.0 percent. There is a big difference, though, in their minimum deposit amounts. The former requires $20,000 Canadian while the latter only requires $1,000 Canadian. Comtech also offers a wider range of terms, from one month to one year in increments of one month. Among banks, the ICICI Bank Canada, a subsidiary of a major Indian bank, offers the highest interest at 0.50 percent for a one-month term with a minimum amount of $1,000 Canadian.
Even in the one-year CD category, credit unions present a higher interest rate than banks. Outlook Financial offers the highest at 2.10 percent for a minimum deposit of $1,000 Canadian. This institution is a division of the larger Assiniboine Credit Union. Joining Outlook makes you a member of Assiniboine. The bank that offers the highest one-year CD interest rate is Canadian Western Bank at 1.27 percent for a minimum amount of $1,000 Canadian. This bank falls under Schedule 1 classification based on the Canadian Bank Act, which means that it is not a subsidiary of a foreign financial institution and is a true domestic bank.
Achieva Financial, another credit union, has the highest five-year CD interest rate at 3.60 percent for a minimum of $1,000 Canadian. Achieva is a division of Cambrian Credit Union and claims to be one of the first to establish branchless banking, meaning that all of its customer transactions are online. Compared to other insurance companies that offer GICs, Equitable Life offers the highest interest rate at 3.45 percent for a minimum amount of $500 Canadian. Canadian Western Bank still has highest interest rate for banks at 3.30 percent for a minimum deposit of $1,000 Canadian in this term category.