Years ago, a bank teller I’d never met stopped to ask me a question I wasn’t expecting. She looked at my account and said, “Why are you leaving everything in chequing?” I didn’t have a good answer. “Where else do I put it?” I asked. She said, “Anything else. High-interest savings, GICs, mutual funds, invest it yourself, whatever.” That one conversation changed the entire trajectory of my finances.

Most people start where I started. Money comes in, money sits in chequing, maybe some goes to a regular savings account earning almost nothing. You know you should be doing something more with it, but you don’t know what. And the options sound confusing enough that doing nothing feels safer.

Two of the simplest options are GICs and high-interest savings accounts. Neither is complicated. Neither requires you to pick stocks or understand the market. They’re just better places to put money that’s currently earning you next to nothing.

This isn’t financial advice. Just a straightforward comparison of two options that I wish someone had walked me through when I was standing at that bank counter.

What a high-interest savings account is

A high-interest savings account (HISA) is a savings account that pays a higher interest rate than a standard one. That’s it. You deposit money, you earn interest, you can take the money out whenever you want. No lock-in, no penalty for withdrawals.

The rate varies. As of this writing, most competitive HISAs in Canada offer somewhere between 3% and 5%, depending on the institution and whether there’s a promotional rate. Online banks and credit unions tend to offer better rates than the big five banks because they have lower overhead costs.

The interest is calculated daily and usually paid monthly. Your money is liquid, meaning you can move it in and out without restriction.

What a GIC is

A GIC, or Guaranteed Investment Certificate, is essentially a deal you make with a bank or financial institution. You give them your money for a fixed period of time (the “term”), and in return, they guarantee you a specific interest rate. When the term is up, you get your money back plus the interest.

Terms usually range from 30 days to 5 years. The longer you lock in, the higher the rate tends to be, though that’s not always the case. Sometimes 1-year GICs pay more than 3-year ones, depending on what’s happening with interest rates.

The key difference from a HISA: your money is locked. If you put $10,000 into a 1-year GIC, you generally can’t access it for a full year. Some institutions offer “cashable” or “redeemable” GICs that let you withdraw early, but the rate is usually lower, and there may be conditions.

When a HISA makes sense

A HISA is the right choice when you need flexibility. If the money might be needed in the next few months, or if it’s your emergency fund, a HISA is the obvious answer. You get a decent return without giving up access.

Emergency funds should always be liquid. The whole point of an emergency fund is that you can grab it when something unexpected happens. Locking it in a GIC defeats the purpose.

A HISA also works well as a holding area. Maybe you’re saving up to start investing and want a place to accumulate money while you learn. Or maybe you’re between financial decisions and just want your cash earning something in the meantime.

When a GIC makes sense

A GIC makes sense when you have a specific timeline and you know you won’t need the money before the term is up. Saving for a down payment in 18 months? A GIC can lock in a guaranteed rate for that period. Saving for a wedding next year? Same idea.

The advantage of a GIC over a HISA is certainty. A HISA rate can change at any time. The bank can drop it tomorrow and you have no say. A GIC rate is locked in for the full term. If rates fall six months after you buy a 1-year GIC, you’re still earning the rate you locked in.

The disadvantage is the flip side. If rates go up after you lock in, you’re stuck with the lower rate until the term ends. And your money is inaccessible.

GICs and HISAs inside registered accounts

Both GICs and HISAs can be held inside a TFSA, RRSP, or FHSA. When held in a registered account, the interest you earn is tax-sheltered. In a TFSA or FHSA, you’ll never pay tax on it. In an RRSP, it’s taxed when you eventually withdraw.

Outside a registered account, interest income is fully taxable at your marginal rate. That makes it the least tax-efficient type of investment income. If you have room in a registered account, that’s the better place for your savings products.

GIC laddering

If you like the security of GICs but don’t love the idea of locking up all your money for the same period, there’s a simple strategy called laddering.

Instead of putting $10,000 into a single 3-year GIC, you split it up. Put $2,000 into a 1-year GIC, $2,000 into a 2-year, $2,000 into a 3-year, $2,000 into a 4-year, and $2,000 into a 5-year. Each year, one GIC matures. You can reinvest it at whatever the current rate is, or use the money if you need it.

Laddering gives you a blend of higher long-term rates and regular access to portions of your money. It’s a middle ground between the full flexibility of a HISA and the full lock-in of a single long-term GIC. This strategy is especially useful for organizations managing reserve funds, where the principal needs to stay safe but shouldn’t be sitting idle.

CDIC insurance

Both GICs and HISA deposits at member institutions are protected by the Canada Deposit Insurance Corporation (CDIC). This covers up to $100,000 per eligible category, per institution. That means if the bank were to fail (extremely rare in Canada), your money is protected up to that limit.

This applies to deposits at banks and federal credit unions that are CDIC members. Provincial credit unions have their own deposit insurance programs, which often offer even higher coverage.

If you have large amounts of cash, you may want to spread it across institutions or account categories to stay within the coverage limits. The CDIC website breaks down exactly how the categories work.

What about HISA ETFs?

There are also ETFs that hold high-interest savings deposits. Products like CASH, PSA, and HSAV bundle deposits from multiple banks and trade on the stock exchange like regular ETFs. They offer competitive rates and the convenience of buying and selling through your brokerage.

The catch is that these are securities, not deposits, so they aren’t covered by CDIC insurance. They’re also subject to trading fees if your brokerage charges them, and the rate fluctuates. For most people, a direct HISA or GIC is simpler. But HISA ETFs can be useful inside a self-directed brokerage account when you want to park cash without transferring it to a savings account at another institution.

Pick based on your timeline

The decision isn’t complicated. If you need access to the money, use a HISA. If you have a fixed timeline and want a guaranteed rate, use a GIC. If you want a bit of both, consider laddering. And if the money is earning zero in a chequing account, almost anything is better than that.

I’m living proof. That one conversation with a bank teller started me down a path that changed everything. The first step wasn’t picking the perfect product. It was just moving the money somewhere it could grow, even a little.

GICs vs high-interest savings: where to park your cash