What is a GIC?

When you buy a Guaranteed Investment Certificate (GIC), you invest a sum of money for a specific term, or period of time. When you cash in your GIC at the end of that term, you are guaranteed to receive your full principal investment, plus interest.

Note that index-linked GICs may guarantee a certain minimum interest, or have no income guarantee.

Are there different kinds of GICs?

At CIBC we offer a wide range of GICs to meet your investment goals:

• Escalating rate GICs offer premium returns and rates that increase each year.
• Cashable GICs allow you to access your funds before maturity.
• Non-redeemable GICs maximize your returns.
• Index-linked GICs provide access to the unlimited growth potential of investing in equity markets.

GICs are available for your Registered Retirement Savings Plan (RRSP), Registered Retirement Income Fund/Life Income Fund (RRIF/LIF), Registered Education Savings Plan (RESP) and non-registered portfolios.

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What is the effective yield for CIBC Escalating Rate GICs?

The effective yield is the rate that would apply to each year of the GIC if the rates for all years were equal. It is a blended rate that is the geometric average of the annual rates for an Escalating Rate GIC and is useful for comparing Escalating Rate GICs to other GICs.

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How is the effective yield calculated for CIBC Escalating Rate GICs?

The effective yield for CIBC Escalating Rate GICs is calculated as a geometric average of the individual annual rates over the full term of the GIC. This blended rate shows the yield that would apply if the rate were constant for each year and does not include the effects of compounding. View an example.

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How is interest taxed on the CIBC Escalating Rate GICs?

Interest is taxed differently depending on whether you choose to have GIC interest paid annually or paid in full at maturity. With the annual interest payment option, interest will be taxed each year based on the interest paid in that year. If interest is to be paid at maturity, interest will be taxed each year using the effective yield and will include the effects of compounding.

View examples of interest taxation

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What is the applicable redemption rate if I redeem a CIBC Cashable Escalating Rate GIC before maturity?

The redemption rate is the interest earned on funds withdrawn from your Escalating Rate GIC. This rate depends on the interest rate(s) for the year(s) up to and including the final completed year before you withdraw funds. View an example.

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What is an index-linked GIC?

CIBC index-linked GICs are a safe way to benefit from the potential growth of investing in the stock market. Your initial investment is 100% guaranteed, and the interest on your investment is based on the performance of well-known indices from Canadian or international markets. For more details on index-linked GICs, see the CIBC Index-Linked GICs Information Statement, ask for an Information Statement at any CIBC branch or call CIBC Telephone Banking at 1-800-465-2422.

At CIBC we offer two index-linked GICs: the CIBC Stock Market Advantage GIC and CIBC Market Mix GIC.

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What is the rate of return for CIBC index-linked GICs?

The interest on your CIBC index-linked GIC is based on the performance of Canadian or global market indices over your GIC's term, a participation rate applied to that growth, and, for the CIBC Market Mix GIC, the relative weighting of each index plus a guaranteed minimum interest rate (called the Weighted GIC Component).

If the indices increase over the term of your GIC, you will receive a portion of that increase in addition to your initial investment. If there is no index growth over the term of your GIC, 100% of your initial investment will always be returned to you - regardless of what happens to the market indices. For the CIBC Market Mix GIC, you will also receive a minimum interest amount from the GIC component.

For more details on how to calculate the return on an index-linked GIC, see the CIBC Index-Linked GICs Information Statement.

What is a participation rate?

A participation rate is the percentage of any growth in the market indices over your GIC's term. It allows CIBC to provide a guarantee on your initial investment plus the added benefit of unlimited growth potential. It is set at the time of purchase, does not change during your GIC's term, and is shown on the confirmation you will receive for your GIC purchase.

How are my non-registered GICs taxed?

For questions and answers regarding your T5/RL-3 and NR4 tax slips, please read You, Your GIC and Your T5.

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