Studying abroad in Canada comes with lots of expenses to manage. But, to become financially independent even before you become a working professional can help you in making your journey smoother. So, creating a GIC account is the first step when navigating to Canada to achieve your global dreams. It’s a low-risk investment option to consider in the country before your stay.
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Also Read: Student Loan Requirements to Study in Canada.
What is a GIC Account?
A GIC account stands for Guaranteed Investment Certificate, an investment account created by banks and financial institutions for international students wishing to pursue their education in Canada. Students get an opportunity to earn guaranteed interest rates for a fixed period. A deposit of a certain amount needs to be made and in return, the banks guarantee to pay on maturity.
GICs are considered low-risk investments as they offer a guaranteed return. However, the interest rates are generally lower than higher-risk investments like stocks and mutual funds. The terms may vary from months to years, and withdrawing money before maturity can lead to penalties and loss of accrued interest.
Who can Open it?
Anyone can open a GIC account- residents or non-residents. However, non-residents can only create their GIC accounts with certain financial institutions.
Some Canadian financial institutions offer GIC programs specifically designed for international students and immigrants seeking to study and work in Canada. These GICs often serve as the proof of funds required for visa applications.
An Indian student who has a letter of admission from a Canadian university can apply for a GIC account. You must meet the age criteria, and have a valid passport and PAN card.
Also Read: Indian Banks Providing Education Loans to Study in Canada
How does it work?
GICs are popular choices for those seeking a stable investment option. Its working is simple. Firstly, the investment made in this account is as per the Canadian government’s rules and regulations for students who wish to pursue their studies under the SDS program.
Students have to deposit the minimum amount of money (CAD 10,000– 6.2 lakhs INR app. or one year’s worth of cost of living) from their original bank account to the GIC account. On this amount, they will get the interest rate every month as set by the financial institution.
The interest rate on a GIC account doesn’t usually change until you choose one with a variable interest rate. Redeeming or encashing GICs before maturity is not usually advisable as doing this can lead to penalties (even if it is due to unavoidable circumstances).
Features of GIC Account
GICs have fixed terms ranging from months to years, during which your funds are invested. The principal amount you invest is guaranteed and returned upon maturity. GICs offer predetermined interest rates for the term duration, providing a predictable return on investment.
They are considered very low-risk investments, suitable for individuals seeking stability and security for their funds. GIC interest rates can be paid out periodically (monthly, annually) or compound and paid at maturity.
Also Read: OSAP Canada Interest Rate
Eligibility to Open a GIC Account
You are eligible to open an account with the Canadian Government if you are planning to study abroad under the SDS (student direct stream) program. You must have an acceptance at the Designated Learning Institution (DLI) to study in Canada.
To meet the visa requirements, students must demonstrate proof of sufficient financial funds for living expenses in Canada, including the GIC investment amount. The student must be of legal age in the province where they plan to open a GIC account.
Different financial institutions have different requirements and specific eligibility criteria that are tailored to international students belonging to different countries. This includes different documentation requirements, investment amounts, and other procedures.
Benefits of Opening a GIC Account
Opening a GIC account in Canada for Indian students offers multiple benefits to plan their studies and living expenses in the country. The major benefit of creating a GIC account is that it provides you with low-risk investment options with a guaranteed return of the principal amount, ensuring stability during your studies. Although the interest rates are not very high, GIC does offer an additional source of income through accrued interest upon maturity.
Besides, many Canadian study permits require proof of sufficient funds. In such a scenario, GICs help you show financial stability to cover your living expenses while studying in Canada. If you responsibly manage your GIC account, you can begin building a credit history in Canada which may be beneficial for future financial endeavors.
Also Read: Top 10 Banks in Canada
How to open a GIC account? (Stepwise)
Opening a GIC account with a Canadian Bank is quite simple.
Step#1- The first step is identifying the bank you want to open a GIC account with. Bank of Montreal, ICICI Canada, Scotia Bank, Simplii (Direct arm of CIBC), and CIBC provide options for Indian students to create an account with them.
You must consider the number of branches the bank has. This will make it easier for you to visit the branch to solve any payment issues or banking needs.
Step#2- Register yourself with an email address. Most banks have an online process and you can complete the application process through the same. Your documents such as your passport and the proof of enrollment (letter of admission) will be required to complete the application.
Step#3- After completing the application, you’ll receive an email stating your account number and the payment instructions. Transfer the funds via Wire Transfer or online services to the GIC account.
Please note that banks charge a processing fee. You need to make the payment along with it. Here’s the list of processing fees charged by the following banks-
| Bank of Montreal | ICICI Canada | Simplii | CIBC | Scotia | |
| Processing fees | CAD 150 (CAD 100 for processing + CAD 50 to cover the Wire Transfer fee) | CAD 150 | CAD 200 | CAD 200 | CAD 200 |
| Account opening time | Instant | Instant | 1 day | 1-2 days | 2-4 days |
Step#4- Once the funds are credited to the GIC account, you will receive an Investment Balance confirmation and a Certificate of Investment via email.
Step#5- Visit the Bank branch in person for the verification process when you reach Canada. Your GIC account will be activated after the completion of this step.
Following these steps, a person can easily open a GIC account in Canada.
It is crucial to understand the working of a GIC account and meet the eligibility requirements of the Specific Canadian institution you intend to apply for. Overall, opening a GIC account provides a secure and compliant means for Indian students to meet visa requirements, maintain financial stability, and begin establishing a financial foundation in the country.
FAQs
Four banks in Canada allow Indian students to open a GIC investment account with them. They are- Bank of Montreal, Simplii (Digital arm of CIBC), ICICI Canada, and Scotia Bank.
To send money to a GIC account from India, you first need to open an account with your chosen Canadian institution. Be ready with the recipient’s bank details like the account number, institution address, and SWIFT/ BIC code. Make sure to follow the instructions received from the Canadian institution on how to deposit funds into the GIC account. Select the transfer method- wire transfer or online services.
According to a general estimate, the Government of Canada states on its website that the minimum amount to deposit in a GIC account is CAD 10,000 per year for tuition fees and living expenses.
Yes, you can withdraw money from your GIC account before the maturity date. However, it is not recommended to do so as it can result in loss of interest and lead to penalties.
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