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6 February 2023

Term deposit Vs GIC | Difference | Comparison

The options that both program offers are what set a term deposit apart from a GIC, or guaranteed investment certificate. Term deposits only provide the two options of short-term and long-term deposits. The guaranteed investment certificate, on the other hand, provides options like flexible GIC, GIC linked to the market, etc. Let us discuss some more differences between Term Deposit Vs GIC with the help of the comparison given below.

What is a Term deposit?

Among the available investment options is a term deposit. A term deposit as the name suggests is a deposit made at a specific financial institution that, after a predetermined amount of time, returns the money to us with an additional rate of interest. It is regarded as one of the safest investment options. In some nations, a term deposit is also referred to as a time deposit. It is a non-negotiable form of investment. It is not possible to transfer the deposit made at the specific financial institution.

Related article: Difference between LIC and GIC

What is GIC?

A contract that covers any risk save the danger of death is known as general insurance. It's also known as property and casualty insurance or nonlife insurance. The purpose of insurance is to protect ourselves and our possessions, such as our home, automobile, and outer assets from hazards like fire, theft, flood, storm, accident, and earthquake. There are contracts known as indemnity agreements where the insurer promises to reimburse the insured for any losses. Therefore, regardless of the level of policy coverage, the insurance company will pay the insured for their loss. They must be renewed each year because they typically last one year.

Term deposit Vs GIC | Difference | Comparison

  • A time deposit is another name for a term deposit. On the other hand, A GIC is a guaranteed investment certificate.
  • One can not withdraw the money once one opts for a guaranteed investment certificate. While in, on the other hand, one can withdraw the money at any time in a term deposit. However, one must pay the penalty for doing so.
  • The maturity of the term deposit is less. On the other hand, the guaranteed investment certificate has a longer maturity.
  • The rate of interest is less for a term deposit. On the other hand, the rate of interest is more for a guaranteed investment certificate.
  • The term deposit's lock-in period is longer. It is 30 to 364 days. O the other hand, the lock-in period of a guaranteed investment certificate is more. It is one to five years.
  • The rate structure in a term deposit is quite different from the rate structure of a guaranteed investment certificate.
  • When a recipient opts for a term deposit, he or she is left with only two options, they are short-term deposit and long-term deposit. On the other hand, the recipient is offered several choices when they opt for a guaranteed investment certificate. There are a variety of options available, such as flexible GICs and cashable GICs.

Thanks for reading the article. Still, if you have any questions or queries in your mind on the difference betweenTerm deposit and GIC then please ask us in the comment section below. 

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