- With the Bank of Canada policy rate at 2.25%, markets expect little change through 2026 unless inflation or jobs surprise.
- Top non-redeemable GIC rates run about 3.65% (1-year) to 3.85% (5-year), with 3–5 year terms clustered near 3.7–3.8%.
- High-interest savings rates vary widely, with many standard accounts near 1–3% and promos reaching roughly 4.6% but often with conditions.
- Because longer-dated GIC yields are relatively flat, locking in now can hedge against future cuts while promo savings rates may fade.
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After the Bank of Canada reduced its policy rate to 2.25% in late 2025 and held it at that level in the December decision, the market’s expectations have coalesced around minimal further cuts for the rest of 2026. This monetary environment puts downward pressure on variable rates and savings yields, but fixed-rate instruments like GICs remain attractive owing to enhanced premiums for lock-in.
Current data confirms that properly structured GICs—especially non-redeemable, fixed-rate long-term ones—are offering the most compelling risk-adjusted returns among low-risk Canadian retail options. For instance, 5-year GICs are yielding as much as ~3.85% from institutions like EQ Bank, and 3- to 4-year tenors are clustered in the ~3.70–3.80% range. Shorter-term non-redeemable GICs (1- to 2-year) offer lower yields, but are useful for laddering or liquidity.
Savings accounts, including high-interest ones, show broader dispersion due to promotional offers, eligibility criteria, and institutional business models. The top savings rates approach ~4.50–4.60% under specific promotions or conditions (e.g. qualifying direct deposits, online eligibility), but many ordinary HISAs are well below, in the 1–3% range. Promos tend to be ephemeral and often conditional.
Strategically, for savers and smaller investors, allocating capital into long-dated GICs now captures higher lock-in yield, protecting against potential rate cuts or inflation surprises. For institutions and banks, balancing liquidity, deposit costs, and customer expectations will be critical: offering competitive savings rates risks compressing margins unless deposit-funded assets also reprice favorably.
Key risks include inflation remaining above target, which could force tightening; external shocks (e.g. trade-related) affecting rates; and for longer-term products, reinvestment risk if rates fall. Also, promotional savings rates often come with fine print that could affect the real return.
Supporting Notes
- As of December 10, 2025, the Bank of Canada holds its overnight lending policy rate at 2.25% and indicates that, if inflation and economic activity evolve broadly in line with projections, the current rate is “about the right level” for the foreseeable future.
- NerdWallet Canada reports a 1-year non-redeemable GIC rate of 3.65% at Saven Financial and WealthONE, and a 5-year GIC rate of 3.85% at EQ Bank, as of January 5, 2026.
- Other major providers for long-term GICs—Achieva Financial, Hubert Financial, Oaken Financial—are offering rates in the 3.70–3.80% range for 3- to 5-year terms.
- High-interest savings accounts display wide variation: promotional or special accounts (e.g. RBC eSavings, Scotiabank MomentumPLUS, Tangerine) reach up to ~4.60–4.75%, while many standard savings options are under 3%.
- Many savings options require conditions such as direct deposit or minimum balance to qualify for top promotional rates, reducing effective yield or raising accessibility barriers.
- The Bank of Canada’s “neutral rate” is assessed by staff in the range of ~2.25–3.25%, implying current policy is at or near neutral, limiting room for significant rate movements downward without risk.