GICs vs High-Interest Savings vs Cash ETFs in Canada (2026): Where to Park Your Money, and What Each One Really Pays
As of late September 2026, with the Bank of Canada rate at 2.25%: the best 1-year GIC pays about 3.65% and the best 5-year GIC about 4.45%; top high-interest savings accounts pay about 2.85% (higher with short promotions); and HISA/cash ETFs such as CASH and PSA yield about 2.1%-2.2%. Use a savings account or cash ETF for money you might need any time, like an emergency fund. Use GICs, ideally in a ladder, for money you won't need for one to five years. All three are taxed as interest income outside a TFSA, RRSP or FHSA.
Canadians keep a lot of money in cash, and in 2026 the gap between the best and worst places to park it is large. The same $20,000 could earn over $800 a year in a top GIC or next to nothing in a big-bank chequing account.
Here's how the three main options compare.
What each one pays right now
With the Bank of Canada's policy rate at 2.25%, these were among the best rates available in late September 2026:
| Option | Best rates available | Access to your money |
|---|---|---|
| 1-year GIC | ~3.65% | Locked for 1 year (non-redeemable) |
| 2- to 3-year GIC | ~4.20%-4.30% | Locked for the term |
| 5-year GIC | ~4.45% | Locked for 5 years |
| High-interest savings account (regular rate) | ~2.85% | Any time |
| HISA / cash ETFs (CASH, PSA, CSAV, CBIL) | ~2.1%-2.2% | Any trading day |
Big-bank posted rates are usually lower. Online banks and smaller institutions pay more. Promotional savings rates can be higher for a few months, then drop.
Option 1: GICs
A guaranteed investment certificate is a deposit you lock up for a set term at a guaranteed rate.
Pros:
- The highest safe rates, especially for 2- to 5-year terms
- Rate is fixed, so it doesn't fall if the Bank of Canada cuts
- Covered by deposit insurance, within limits
Cons:
- Most can't be cashed before maturity
- Cashable or redeemable GICs pay less
- You miss out if rates rise after you buy
Tip: build a GIC ladder, splitting money across 1- to 5-year terms so something matures every year. See How to Build a Bond Ladder.
Option 2: High-interest savings accounts (HISAs)
A savings account at a bank or credit union, usually an online one, paying a variable rate.
Pros:
- Withdraw any time
- Deposit insurance through CDIC or a provincial insurer
- No fees at most online banks
Cons:
- Rate can drop any time, usually when the Bank of Canada cuts
- Promotional rates expire, often after 3 to 5 months
Option 3: HISA and cash ETFs
ETFs such as Global X High Interest Savings (CASH), Purpose High Interest Savings (PSA) and similar funds hold deposits at big Canadian banks and pay out the interest monthly. You buy them like a stock in your brokerage account.
Pros:
- Easy to hold inside a brokerage TFSA, RRSP or FHSA, right next to your investments
- Sell any trading day
- Very low risk of loss
Cons:
- Lower yield than the best savings accounts or GICs right now, after fees
- Not CDIC-insured for you as the ETF holder
- Rate floats with interest rates
- Possible trading commissions and a small bid-ask spread
How they're taxed
All three pay interest income, the most heavily taxed kind of investment income in Canada.
- In a non-registered account, interest is taxed at your full marginal rate, every year, even on a 5-year compounding GIC.
- In a TFSA, RRSP or FHSA, it's sheltered.
At a 40% tax rate, a 4.45% GIC nets about 2.67% after tax in a taxable account. Inflation was 3.0% in August 2026, so after tax and inflation, even the best GIC barely breaks even. That's worth knowing before keeping long-term money in cash.
Which one to use: a simple rule
| Your goal | Best fit |
|---|---|
| Emergency fund | High-interest savings account, or a cash ETF if it lives in your brokerage account |
| Down payment in 1-3 years | GICs matched to your purchase date, ideally inside an FHSA |
| Money you might invest soon | Cash ETF inside your brokerage account |
| Safe income for 3-5 years | GIC ladder |
| Long-term growth (5+ years) | None of these; a diversified portfolio of stocks and bonds |
For emergency-fund sizing, see How Big Should Your Emergency Fund Be?
Five mistakes to avoid
- Leaving cash in chequing. Big-bank chequing accounts often pay close to zero.
- Chasing promotions without reading the fine print. Many apply only to new deposits and last a few months.
- Going over deposit-insurance limits at one institution. Spread large amounts across banks.
- Locking all your cash in long GICs. Keep some in a savings account for emergencies.
- Keeping long-term money in cash. Safe isn't the same as smart over 10 or 20 years.
Bottom line
Right now, GICs pay the most if you can commit; savings accounts win for flexibility; cash ETFs are the easiest option inside a brokerage account. Match the tool to when you'll need the money, keep it in a registered account where you can, and check rates at least once a year.
Frequently asked questions
Is a GIC better than a high-interest savings account?
For money you won't need for a year or more, GICs usually pay more. In September 2026, the best 1-year GIC paid about 3.65% vs about 2.85% for the best regular savings rate. But most GICs lock your money until maturity, while a savings account lets you withdraw any time.
Are HISA ETFs safe?
HISA ETFs such as CASH and PSA hold deposits at large Canadian banks, so the risk of loss is very low. But they aren't CDIC-insured the way your own bank deposit is, their yield changes with interest rates, and you pay a small management fee and trading costs.
Is my GIC insured?
GICs of five years or less from CDIC member institutions are covered up to $100,000 per insured category per institution. Credit union GICs are covered by provincial deposit insurers, whose limits vary by province. Check the issuer's coverage before buying.
How is GIC and savings interest taxed in Canada?
Interest is fully taxable at your marginal rate in a non-registered account, every year, even on multi-year GICs where interest compounds. Holding GICs, savings or cash ETFs inside a TFSA, RRSP or FHSA shelters that interest from tax.
Should I keep my TFSA in cash?
Only for short-term goals. Cash and GICs are safe but grow slowly; over long periods, a diversified stock portfolio has historically grown much more. If you won't need the money for five years or more, most TFSA room is better used for long-term investments.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Sep 26, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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