GIC & Compound Interest
Calculator Canada
Enter what you deposit, the rate on your quote and the term. The calculator shows your final value, interest earned, tax on the interest in your province, and what the money is worth after inflation.
Your investment
Your results
Projections assume the rate you enter stays the same for the whole term and that tax on interest is paid from other funds. Real GIC rates, terms and tax treatment vary by product. Not financial advice. Terms →
Year by year
Cumulative figures at the end of each year.
| Year | Total deposited | Interest to date | Balance |
|---|
How compounding frequency changes the result
The same deposit, rate and term with each compounding choice. The effect is small at normal rates, and larger with higher rates or longer terms.
| Compounding | Final value | Interest earned |
|---|
How GICs and compound interest work
A Guaranteed Investment Certificate (GIC) pays a fixed rate of interest for a set term, and the issuer guarantees the principal. Most GICs are bought from banks, credit unions and trust companies. The interest compounds, which means you earn interest on your interest, and the effect grows with the length of the term.
The formula
The final value of a lump sum is the deposit multiplied by (1 + rate / n) raised to the power of n times the years, where n is how many times a year interest compounds. For $10,000 at 4% for five years, compounded annually, the result is $12,167. Compounded monthly it is $12,210, a difference of only a few dollars. Compounding frequency matters far less than the rate and the term.
Tax on GIC interest
In a non-registered account, GIC interest is fully taxable as income. For a multi-year GIC you must report interest each year it accrues, even if it is paid at maturity. The tax rate is your marginal rate, which depends on your income and province. As an example, saving $200 a month for five years at 4% with $80,000 of income in Ontario earns about $1,260 of interest, and about $374 of that goes to tax. Inside a TFSA, RRSP, FHSA or RESP, interest is not taxed in the account, which is why a GIC is often held in one of them.
Inflation and real return
A 4% GIC with 2% inflation grows your purchasing power by about 2% a year before tax. After tax in a non-registered account at a high marginal rate, the real return can be close to zero. The calculator shows the value after tax and after inflation so you can compare it with the nominal total.
Rule of 72
Divide 72 by the annual rate to estimate the years to double your money. At 4%, that is about 18 years. At 6%, about 12 years. It is an approximation that works well for rates between 2% and 12%.
Types of GIC
- Non-redeemable GICs usually pay the highest rate but lock your money until maturity.
- Cashable or redeemable GICs let you withdraw early, often at a lower rate.
- Market-linked GICs pay a return tied to an index and are not modelled here, since the return is not fixed.
- Laddering splits the money across several terms, such as one to five years, so a part matures each year.
CDIC protection
The Canada Deposit Insurance Corporation covers eligible deposits up to $100,000 per depositor, per insured category, at each member institution. Registered plans such as TFSAs and RRSPs are covered in separate categories from non-registered deposits. Credit unions are covered by provincial deposit insurers, whose limits differ by province. Check that your issuer is a CDIC member.
When a GIC makes sense
A GIC suits money you need on a known date and cannot risk, such as a down payment, tuition or an emergency fund you will not touch. For money you will not need for ten years or more, lower-cost diversified investments have historically grown faster, though they can lose value in the short term. This calculator is for planning, and it does not recommend a product.
Frequently asked questions
How much will $10,000 in a GIC be worth after 5 years?
At 4% compounded annually, about $12,167. The result depends on the rate. Change the rate and term above for your quote.
Is GIC interest taxable in Canada?
Yes, in a non-registered account it is taxed as income at your marginal rate. For multi-year GICs the interest is taxable each year as it accrues. Inside a TFSA, RRSP, FHSA or RESP it is not taxed in the account.
Does compounding frequency matter?
A little. Monthly compounding earns slightly more than annual at the same rate, but the difference is small. The rate and term matter much more.
What is the CDIC limit?
$100,000 per depositor, per insured category, per member institution. Registered plans are insured separately from non-registered deposits. Credit unions are covered by provincial insurers.
What is the difference between a GIC and a high-interest savings account?
A GIC locks your money for a term at a fixed rate. A savings account pays a variable rate and lets you withdraw anytime. Rates differ by institution.
Should I hold a GIC in a TFSA or RRSP?
Interest is taxed as full income, so a registered account usually saves tax for money you plan to hold in GICs, if you have room. Which account depends on your goals and tax rate.
How do I include inflation?
Enter your expected inflation rate. The calculator shows the value after tax and after inflation, which is a better measure of what the money can buy.
Does this show current GIC rates?
No. Enter the rate you are quoted. GIC rates change often and vary by term and institution.