Best US Dollar GIC Rates in Canada

Investing in GICs allows you access to the currency of the country issuing the investment product and has several advantages. While the most commonly traded currency is the US Dollar, which is the global reserve currency, your bank may offer you GICs in the British Pound, Japanese Yen, and Euro.

How does a US Dollar GIC work?

Say, for instance, you intend to travel to the US in the next six months. You can buy a US Dollar GIC and set aside the funds you’ll need. Not only will the investment earn interest for you, but it will also lock in favourable rates if you think that the Canadian dollar value is likely to drop. You can also buy the US Dollar GICs purely for investment purposes. You’ll add diversity to your portfolio and earn good returns from currency appreciation.

Investing in Foreign GICs May Have a Few Downsides

While purchasing GICs is a good option, you may want to keep certain factors in mind.

• You can buy US Dollar GICs and term deposits with a registered account.
• You’ll likely earn a lower rate of interest in a foreign GIC as compared to the interest on a Candian Dollar GIC.
• Foreign currency GICs don’t carry CDIC insurance. In case the issuing bank or financial institution fails, you have no assurance of getting your investment back.
• When investing in GICs, you should be aware of the bank’s “spread.” Each time the bank trades in foreign currency, they add a spread of 1% to 1.5% above the market rate when buying. Banks also sell at a similar rate below the market value.

If you would more information about how GICs work, log onto our offerhub.ca website and we’ll give you in-depth details that will help you make a choice.