Canada’s top five-year GIC rate climbs to 4.55%

GIC rates in Canada have risen across the board, a welcome relief for Canadians looking for a safe place to store their money.

WealthONE now offers Canada’s highest five-year GIC rate at 4.55 per cent, up from the market-leading 4.00 per cent six months ago. WealthONE also offers the best two-, three- and four-year GIC rates at 4.30 per cent, 4.40 per cent and 4.45 per cent, respectively, with the best two- and three-year rates both up from 3.80 per cent in April. Haventree Bank leads one-year GICs at 4.00 per cent.

Meanwhile, the best standard savings account rates have remained stable. WealthONE offers 3.00 per cent on its RRSP savings account regardless of balance. Its nonregistered savings account offers tiered rates: 2.60 per cent on balances below $10,000, 2.75 per cent on balances from $10,000 to $24,999, and 3.00 per cent on balances of $25,000 or more.

Manulife also offers 3.00 per cent for two years on up to $500,000 in net new deposits to newly opened nonregistered accounts.

Interesting promotional savings rates

BMO continues to offer the leading promotional savings rate of 5.00 per cent for 120 days. Alberta’s Servus Credit Union matches the 5.00 per cent rate, but only for 90 days on at least $5,000 in new funds. Its offer requires opening an account by Oct. 31.

GIC rates are rising. That could be a reason not to lock in for five years

Other regional credit unions are competing aggressively. Manitoba’s Steinbach offers 4.60 per cent for four months to new members across Canada who open an account by Nov. 2. Ontario’s WFCU offers 4.56 per cent for four months.

Unlike GICs, these accounts offer greater flexibility, although promotional rates typically expire after a few months and can carry eligibility restrictions.

Could rising inflation push GIC rates higher?

Canada’s inflation rate rose to 3.1 per cent in September, from 3.0 per cent in August, largely driven by a 27.8 per cent increase in gasoline prices. However, underlying inflation softened, with the Bank of Canada’s CPI-trim and CPI-median measures declining to 1.8 and 1.9 per cent, respectively.

Higher inflation is also eroding savers’ returns. At 3.1 per cent inflation, a savings account paying 3.00 per cent loses purchasing power even before taxes. A five-year GIC yielding 4.55 per cent exceeds the current inflation rate by just 1.45 percentage points before taxes.

Meanwhile, financial markets are betting on a Bank of Canada rate hike at its Oct. 28 meeting. Persistent inflation could push short-term GICs higher, while five-year GIC and fixed mortgage rates depend more on bond yields, which may already reflect expected hikes.

For savers, locking in today’s rates provides certainty, but waiting could pay off if inflation persists and GIC rates climb further.

Interest rates are provided by WOWA.ca, which gathers, aggregates and freely disseminates data on mortgage rates, savings accounts, and GIC rates from 50+ Canadian financial institutions.

Sanika Purohit is a writer and content developer at WOWA.ca, a Canadian personal finance platform.