A Guaranteed Investment Certificate (GIC) is a fixed-term deposit that pays a guaranteed interest rate. Canadian GICs come in two main varieties: cashable (typically annual compound) and non-redeemable (often semi-annual compound, higher rate).
Compounding matters
A 5% rate compounded monthly produces a higher effective return than 5% compounded annually. The difference matters most on longer terms.
Taxation
GIC interest is fully taxable at your marginal rate in the year it accrues, not when you cash out. This means non-registered GICs are tax-inefficient. Holding GICs inside a TFSA or RRSP eliminates this drag.