A $10,000 GIC at 4% for three years is worth $11,248.64 at maturity when interest compounds yearly. Enter your own amount, rate and term below to see the value and the interest you’d earn.
Why do two GICs at the same rate pay differently?
Because the interest type matters. Simple interest is paid once, at the end, on your original deposit. Compound interest joins the balance at each period, and the next period earns on the bigger sum. The table uses $10,000 at 4% for three years.
| Interest type | Interest earned | Value at maturity | Effective yearly rate |
|---|---|---|---|
| Simple, paid at maturity | $1,200.00 | $11,200.00 | 4.00% |
| Compounded yearly | $1,248.64 | $11,248.64 | 4.00% |
| Compounded twice a year | $1,261.62 | $11,261.62 | 4.04% |
| Compounded monthly | $1,272.72 | $11,272.72 | 4.07% |
Simple versus monthly is a gap of $72.72 over three years. Small, but it’s real money. And it grows with a longer term and a bigger deposit, so if you’re locking in for five years and putting in a large amount, you’ll notice the difference far more than you would on a one year GIC.
What does a $25,000 five year GIC earn?
Put $25,000 into a five year GIC at 3.5% with yearly compounding. The calculator shows $29,692.16 at maturity, which is $4,692.16 of interest. The effective yearly rate matches the quoted 3.50%, since compounding happens once a year. At simple interest the same money would earn $4,375, so compounding adds $317.16 over the term.
When you compare offers, use the effective yearly rate, not the headline rate. A GIC at 3.5% that compounds monthly shows a slightly higher effective rate than one that compounds yearly at 3.5%.
Is GIC interest taxed?
Yes, if you hold it outside a TFSA or an RRSP. You report it as income every year, even when the GIC pays only at maturity. The calculator shows interest before tax, so in a taxable account your gain after tax will be lower. Inflation isn’t in the numbers either, and a 4% GIC doesn’t add 4% of buying power when prices rise by about the same amount. Saving for something specific, like a down payment? Set the target and test several terms until the maturity value gets there.
What the estimate can’t tell you
It holds one rate for the whole term and assumes no early cash in. A product that resets its rate or lets you redeem early follows its own terms, so read the contract. For registered accounts, the TFSA calculator shows how room and growth work. To see growth with regular deposits, use the compound interest calculator, and for a plain interest figure on any loan or deposit try the interest calculator.
Where do the numbers come from?
You can trace every figure to the formulas in the calculator, and you can check them by hand. Simple interest multiplies the deposit by the rate and the years, and compound interest applies the growth formula once per period. The federal consumer agency publishes a general guide to GICs. We don’t store any rates, because GIC rates change by lender and by term. Results are estimates, and this website has no connection with any government body.
Frequently asked questions
What does $10,000 earn in a GIC at 4% over three years?
With yearly compounding it grows to $11,248.64, so $1,248.64 of interest. With simple interest paid at maturity it grows to $11,200.00.
How do simple and compound interest differ on a GIC?
Simple interest is figured on the amount you put in and nothing else. Compound interest is added to the balance each period, so later interest is earned on earlier interest.
Why is the effective yearly rate higher than the rate I was quoted?
Compounding more often adds interest sooner. A 4% rate compounded monthly works out to an effective 4.07%.
Do I pay tax on GIC interest?
Yes, if the GIC sits outside a TFSA or an RRSP, the interest is taxable income each year. The calculator shows it before tax.
What should I compare when choosing between two GICs?
The effective yearly rate, shown under the result. It puts different compounding schedules on one scale, so a 4.07% offer beats a 4.04% offer over the same term.
Sources and updates
Updated: . How we check rates · Editorial team · Updates
Estimate only. These figures are a planning estimate, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns, and we don't offer tax, legal or accounting services. We have no connection with the Canada Revenue Agency, Revenu Québec or any provincial government. Your real amounts depend on details this tool cannot see, so confirm them with an official source or a qualified professional before you act.