What is a Non-Redeemable GIC?

A non-redeemable GIC (Guaranteed Investment Certificate) is a type of investment where you agree to lock in your money for a set period of time in exchange for a guaranteed interest rate.

The key detail is in the name: non-redeemable means you generally can’t cash it out early without losing interest or facing strict conditions.

KOHO High Interest Savings

Before diving deeper into GICs, it’s helpful to think about what you want from your money.

With KOHO High Interest Savings, you can:

• Earn a competitive rate on your savings

• Keep your money flexible and accessible

• Avoid traditional monthly account fees

• Track your balance and interest easily in the KOHO app

So while a non-redeemable GIC locks your money in for a fixed term, a high-interest savings account is better suited for short-term goals, emergency funds, or cash you might need on short notice.

How a Non-Redeemable GIC Works

When you buy a non-redeemable GIC, you’re agreeing to three main things:

1. Term: How long your money is locked in (e.g., 1 year, 3 years, 5 years).

2. Rate: The interest rate is usually fixed for the entire term.

3. Access: You generally can’t withdraw your money before the term ends.

At the end of the term (the maturity date), you get back:

• Your original amount (the principal), plus

• The interest you earned over the term

Because you’re committing to leave your money untouched, non-redeemable GICs often offer a higher rate than regular savings accounts or redeemable GICs.

Pros and Cons of Non-Redeemable GICs

Advantages

• Guaranteed return: You know exactly how much you’ll earn if you hold it to maturity.

• Low risk: Your principal is typically very safe when held with a regulated financial institution.

• Good for fixed timelines: Helpful if you know you won’t need the money until a specific date (e.g., in 2 or 3 years).

Disadvantages

• No (or very limited) early access: If you need your money before the term is up, you may not be able to get it—or you could lose all or most of the interest.

• Less flexibility: Not ideal for emergency funds or changing plans.

• Opportunity cost: If interest rates rise after you lock in, your money stays at the old rate until maturity.

When a Non-Redeemable GIC Might Make Sense

A non-redeemable GIC can be a good fit if:

• You have money you won’t need for a while

• You want a safe, predictable return

• You’re okay trading flexibility for a potentially higher rate than a regular savings account

The bottom line

A non-redeemable GIC is a low risk investment where you lock in your money at a fixed rate for a set period, with little to no flexibility to cash out early.

It can work well for longer-term, predictable goals—but it’s not ideal if you value easy access to your money.