BMO GIC review

What is a BMO GIC?

A BMO Guaranteed Investment Certificate (GIC) lets you invest money for a fixed period with no risk of loss. BMO GIC rates are either fixed or variable, and terms for most certificates range from one day to six years. You can choose between cashable, non-cashable, US dollar and market-linked GICs.

Sound confusing? Let’s dive deeper into how BMO GICs work, including BMO GIC rates and special offers.

Types of BMO GICs

The Bank of Montreal offers four types of GICs:

Cashable

A BMO Cashable GIC can be redeemed before the maturity date, meaning you can get your initial investment back before the GIC term expires. But the earlier you redeem, the less interest you’ll earn. Rates are usually lower for cashable GICs than non-cashable GICs.

Non-cashable

As the name suggests, BMO non-cashable GICs cannot be redeemed before the maturity date. Once you invest, your funds are locked in until the GIC term expires. If you’re willing to commit to a fixed term, you can earn more interest than with a cashable BMO GIC.

US Dollar

BMO US dollar GICs provide a way to benefit from dips in the value of the Canadian dollar. Buy your certificate in USD with terms ranging from 30 days to five years. Fully- and partially-redeemable options are available.

Market-linked investment

With a BMO market-linked GIC, your initial investment amount is protected, and the size of your returns depend on the performance of certain stock or bond indices. Market-linked GICs are a great way to benefit from the potential highs of the stock market with zero risk of loss. But stocks and equities can underperform, so there’s always the possibility of earning less than you hope for.

BMO GIC rates

BMO GIC interest rates start at 2.7% with a 1-year cashable term deposit and go as high as 3.4% with a 1-year non-cashable receipt (annual compound interest option). You could potentially earn more with a market-linked GIC.

Short-term GIC interest rates

Short-term BMO GICs have terms from one day to just under one year. Here’s what you could earn with a non-cashable BMO Short Term Investment Certificate.

Rates last verified on July 3, 2024.

Long-term GIC interest rates

Be prepared to lock in your investment for one year up to six years or more with a long-term BMO GIC. There are many types available, but here’s an example of rates you could get with a non-cashable BMO GIC.

Rates last verified on July 3, 2024.

Are there any BMO GIC special offers?

Some of BMO’s GICs also come with unique selling points worth mentioning. If you’re an AIR MILES collector, BMO offers a GIC that pays out AIR MILES in lieu of interest. You can also take advantage of a GIC that pays income each month from its holdings.

The BMO RateRiser GIC helps you ladder your investments, because it offers an increasingly higher return each year.

Why should I invest in a BMO GIC?

• Guaranteed return. You’ll never lose money with a BMO GIC, because your principal investment is guaranteed. Many GICs also offer predictable, fixed-rate returns.
• Competitive rates. BMO GIC interest rates are in line with what other major Canadian banks are offering. Returns can potentially be even higher with some market-linked investments.
• Variety of terms. Terms are flexible and can range from as little as one day up to 10 years, with higher interest rates paid out for longer terms.
• Special offers. Some GICs offer special features like flexible payment schedules, bonus rates and AIR MILES in lieu of a return on interest.
• CDIC insured. Your BMO GIC deposits are covered by the Canada Deposit Insurance Corporation up to $100,000, provided funds are held in an eligible account like a TFSA, RRSP, RRIF or BMO InvestorLine account.
• Easy to purchase. You can buy BMO GICs by logging into your online banking portal.

What should I look out for?

• High minimum investment. Many of BMO’s GICs require a minimum investment of $1,000 to get started.
• Tough to cash in early with some GICs. Non-redeemable GICs are locked in over a specific term, and your earnings may be reduced if you withdraw funds before the maturity date.
• May not beat inflation. Depending on how long you invest your funds, your interest rates may not be able to keep pace with inflation, which is usually between 1% and 3% according to the Bank of Canada.
• Lower rates for monthly payments. The interest rate is lower if you choose monthly or semi-annual payments instead of annual payments.
• Earnings are taxable. Unless you hold GIC investments in a tax-sheltered account like a TFSA, you’ll have to pay income tax on your earnings.

How to get a BMO GIC

If you’ve decided to move ahead and buy a BMO GIC, you can get started by logging into your online banking account.

Eligibility requirements

• Be a Canadian resident who’s at least the age of majority in your province or territory (18 or 19)
• Have a BMO account to fund your investment (you can apply to open an account online)
• Have at least $1,000 to invest

Documents

• Your name, residential status and contact information
• Your Social Insurance Number (SIN) and date of birth
• Your email address and phone number

How do BMO GICs compare to GICs from other banks?

BMO is one of Canada’s Big Five Banks, alongside TD, CIBC, Scotiabank and RBC. Compared to these, some long-term BMO GIC rates are higher. However, many credit unions and online banks offer higher GIC interest rates.

If you prefer investing with an established, reputable financial institution that offers both online and in-person service, BMO could be a good choice for you.