EQ Bank GICs – Best bank to hold GICs in Canada?
GICs are a great way to invest your money in a very safe and secure way in Canada. With a GIC, your money can be shielded from the market volatility and uncertainty. Although all the Canadian banks or credit unions offer GICs, being an online-only bank, EQ Bank offers some of the best rates on GICs in Canada.
EQ Bank is now offering an annual interest rate of 2.10% on 3 months GIC with a minimum deposit amount of $100.
Summary of EQ Bank's GIC Rates
| GIC Term | Annual Interest Rate | Minimum Deposit | Interest Payment |
|---|---|---|---|
| 3 Months | 2.10% | $100 | At Maturity |
| 6 Months | 2.90% | $100 | At Maturity |
| 9 Months | 3.00% | $100 | At Maturity |
| 1 Year | 4.50% | $100 | At Maturity |
| 15 Months | 4.50% | $100 | Compounded annually but paid at maturity |
| 2 Years | 4.65% | $100 | Annually or at Maturity (compounded annually) |
| 27 Months | 4.65% | $100 | Compounded annually but paid at maturity |
| 3 Years | 4.70% | $100 | Annually or at Maturity (compounded annually) |
| 4 Years | 4.70% | $100 | Annually or at Maturity (compounded annually) |
| 5 Years | 4.70% | $100 | Annually or at Maturity (compounded annually) |
| 6 Years | 4.70% | $100 | Annually or at Maturity (compounded annually) |
| 7 Years | 4.70% | $100 | Annually or at Maturity (compounded annually) |
| 10 Years | 4.70% | $100 | Annually or at Maturity (compounded annually) |
What is a GIC?
A Guaranteed Investment Certificate or GIC is a type of investment option, issued by Canadian Institutions, that offers a guaranteed rate of return on investments over a specific time period. You can invest your money with a Canadian bank or a credit union (commonly known as 'the issuer') for a fixed period of time (commonly known as 'the term') in form of GIC, and the issuer will guarantee you a return on your principal amount.
Due to its guaranteed nature, GICs have a very low-risk profile compared to stocks or mutual funds and they are a great way to grow your money slowly and steadily. The rate of interest on a GIC can vary based on the selected term and is typically higher than the interest rate of a savings account.
EQ Bank GIC Details
EQ Bank offers a wide range of term options with a guaranteed high-interest rate. You can choose a short or long term GIC based on your personal savings goal. Any GIC in EQ Bank can be purchased with only a $100 minimum deposit which makes it very lucrative for beginner investors. Their terms range from a minimum of 3 months to a maximum of 10 years.
All the GICs offered by EQ Bank are non-redeemable, which means you can not withdraw money from your GIC before maturity. Each customer can open up to 20 GICs at a time and each GIC has an investment limit of $100,000. This gives enough room to the investors who like to use the common strategy of laddering GICs. There is a maximum investment limit of $500,000 across all your GICs in EQ Bank.
EQ Bank used to offer GICs only with non-registered accounts, which means you need to pay income tax on the interest that you earn from a GIC. However, in November 2020, EQ banks launched their two registered accounts, TFSA and RSP, and started offering GICs on these accounts. Since it's a new product, currently, you can get better GIC rates in a registered account (GIC rates are higher than non-registered account for GIC terms of 3 months to 1 year).
Since Equitable Bank is a member of CDIC, EQ Bank GICs are eligible for deposit insurance up to a maximum of $100,000 per depositor.
EQ Bank GIC at a glance:
- Competitive GIC rates (starting at 2.10% to 4.70% )
- A low minimum deposit amount of $100
- Flexible term option (minimum of 3 months to a maximum of 10 years)
- Non-redeemable
- Maximum 20 GICs per customer
- Investment limit of $100,000 per GIC
- Aggregated GIC investment limit of $500,000
- CDIC insured
- Mobile dashboard to track your progress
The interest of EQ Bank GIC is calculated as below:
| GIC Term | Interest Calculation | Interest Payment |
|---|---|---|
| Less than a year | Interest is calculated on a daily basis | Interest is paid at maturity |
| One year | Interest is calculated on a per annum basis | Interest is paid at maturity |
| Over one year (except 15 or 27 months term) | Interest is calculated on a per annum basis | Interest is paid either annually (simple interest) or at maturity (compounded annually) |
| 15 and 27 months | Interest is calculated on a per annum basis | Interest is compounded annually and paid solely at maturity |
How much interest you can earn from an EQ Bank GIC?
All the EQ Bank interests displayed above are annual interest rates. The interest is calculated on a daily basis for GIC terms less than a year and is calculated on an annual basis for GIC terms over a year. For GICs over one year term (except for 15 or 27 months term), you can choose to receive your annual interest on a yearly basis. If you choose to receive the whole payment at maturity, your interest will be reinvested resulting in a higher return at maturity thanks to the compound interest.
Here is how much you can expect in return if you open a GIC for 3 months with a deposit amount of $10,000. With the rate of interest of 2.10% for 3 months term, your interest will be calculated as below.
Interest Earned in "X" months = (Principal Amount * Interest Rate) / 100 * (Number of Days in "X" Months/365)
Which comes roughly around $52.38 at maturity.
If you invest the same amount on a 5 years term and choose to receive interest annually, you will earn a fixed interest payment each year.
Yearly Simple Interest = (Principal Amount * Interest Rate)/100
So, for 5 years term, you will receive a total of $2,350.00 (approx. $470 per year) as interest payment on your GIC.
But, if you select to receive the payment at maturity, the interest accumulated during each year will be reinvested giving you a total interest payment of $2,581.53 (approx. $231.53 more after 5 years) at the end of the term. The interest can be calculated using the compound interest formula.
Compound Interest at Maturity = Principal Amount * [(1 + Annual Interest Rate/100)(number of years) – 1]
What are the advantages of opening a GIC with EQ bank?
Here are some key advantages that you can get by opening a GIC with EQ Bank.
High-Interest Rate
EQ Bank offers one of the best GIC rates in the market. You can get more return on your GIC investments compared to most traditional or big 5 banks. Especially for a short term GIC like 3 months, EQ bank offers the best rate in the market. However, there are few other online banks like Motive Financial or Oaken Financial, who goes toe-to-toe with EQ bank in terms of GIC rates, but EQ bank most definitely offers more flexible term options.
Flexible Term Option
As mentioned above, EQ Bank offers a wide range of term periods to choose from (starting from 3 months up to 10 years). This makes an investment with EQ bank very flexible and easy based on your financial goal.
Low Minimum Investment
One of the most attractive minimum deposit limits offered in Canada. You can open an EQ Bank GIC at just $100. This is the lowest compared to all the competitors who have a $500-$1000 minimum deposit limit.
Safety and Security
EQ Bank is owned by Equitable bank, which is the 9th largest bank in Canada and operating in Canada since 1970.
To give peace of mind, principal amounts in GIC investments with EQ banks are eligible for deposit insurance by CDIC, subject to maximum coverage limits.
What are the disadvantages of opening a GIC with EQ bank?
Besides the benefits of EQ Bank, there are few drawback that you should keep in mind before opening a GIC with EQ bank.
No Chequing or Debit Card Options
EQ Bank does not offer any chequing account or debit card to withdraw the fund after maturity. You need to transfer the fund from EQ Bank Savings Plus account to your bank if you want to access your fund via debit/ATM card.
Maximum Limit
EQ bank has a limit on both the number of GICs plus the maximum amount that can be deposited in a GIC. However, the limits are fairly high and can serve the need of most Canadians.
Not Available in Quebec
EQ Bank services are not available in Quebec. So, residents of Quebec cannot open a GIC with EQ bank.
Is EQ Bank GIC right for you?
With high-interest rates, flexible term options, and low minimum deposit requirements, EQ bank becomes a very attractive choice to open a GIC in Canada. It can be a great choice for the following situation (but not limited to):
- If you are a beginner investor and want to get started with investing without depositing a large sum of money, you can open an EQ bank GIC with just $100 as your first investment.
- Since most of the banks have a minimum deposit limit of $500-$1000, EQ Bank GIC is a great option if you have limited funds for investment.
- If you have a short-term investment goal of less than a year, EQ bank can offer you some great rates.
- If you have already maxed out your TFSA or RRSP and want to invest some extra cash for a good return, you can leverage the high-interest rate of EQ Bank's GIC.
How to open a GIC with EQ Bank?
To purchase a GIC with EQ Bank, you need to open an EQ Bank Savings Plus Account first. You must be a Canadian resident and meet your province’s age of majority. Keep your Social Insurance Number (SIN) handy during registration.
To open a new account, go to the EQ Bank website and select 'Join Now'. On the next page, you need to provide some basic contact information to set up a new account. You need to verify your identity via SIN and by linking it to an existing bank account.
In some cases, you might be asked to visit a Canada Post office for identity verification if your existing bank does not fall under the below list.
ATB Financial, Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), Coast Capital Savings, Desjardins, HSBC, Laurentian Bank, Meridian, National Bank, Royal Bank of Canada (RBC), Scotiabank, Simplii, Tangerine, TD Bank, Vancity
Frequently Asked Questions
Who is EQ Bank?
EQ Bank is an online-only direct bank owned by Equitable Bank, a Schedule I Bank which is now Canada’s ninth largest independent bank with approximately $34 billion assets under management. EQ bank offers personal banking services to Canadians by offering high-interest savings plus accounts and GICs. They also offer the option to open a joint account for its customers.
Who can open an EQ Bank account or GIC?
You need to meet the following 3 criteria to open an EQ bank account or GIC.
- Must be a Canadian resident
- Must meet your province’s age of majority
- Must have a Social Insurance Number (SIN)
EQ Bank services are not available in Quebec.
Does EQ Bank offer TFSAs?
Starting November 28th, EQ Bank started to offer registered accounts which includes TFSA and RSP accounts.
What are the fees associated with the EQ Bank?
EQ bank has zero everyday banking fees. Which means EQ bank doesn't charge any monthly account fee or dormant account fees. You can check the complete EQ bank fee here. There are no fees associated with GIC.
What is a non-registered GIC?
Any GIC held under a non-registered account is a non-registered GIC. If your GIC is not invested in one of the registered deposit accounts in Canada (like TFSA, RRSP, RESP, RIF etc.), it'll fall under non-registered GIC.
What happens after GIC maturity?
After maturity, the funds will be deposited to your EQ Bank Savings Plus Account and you will be notified via SMS or email.
How to cancel an EQ Bank GIC?
You will have a cancellation period up to the end of the next business day following your GIC effective day to cancel online. After this, your funds will be locked in and be non-redeemable.
Are interest earned from EQ Bank GICs taxable?
Yes, any interests earned from EQ Bank GICs are taxable and will be included in the T5 tax slip