Difference Between RSP and GIC

RSP and GIC are saving plans popular in Canada. RSP can be opened when you wish to do so and the best part is that that the contributions that you make and the interest that you get, both are non-taxable until distributed. RSP is a better option if you want to get better tax benefits.

GIC is for getting higher rate of interest by saving money for a fixed term. It is locked in for 5 years but the duration can also be extended up to 10 years. There are GICs in which you can cash money if needed but then you get lower rate of interest on them.

To be able to select the appropriate type of saving plan out of these two you should understand them and the differences between them. Here are some common differences between them which will help you in understanding them better:

  • RSP is Retirement Saving Plan which means that is meant for your retirement and if you intend to save for your retirement then you can opt for this. GIC on the other hand is Guaranteed Income certificate and is for the people who want to save for some planned expenses in the near future. GIC is not for retirement purpose.
  • You can withdraw funds from RSP although taxes and charges may be payable on the withdrawals but GIC is locked for 5 years and you cannot withdraw.
  • You get tax benefits on RSP and it is encouraged by government so that people can make arrangements for a comfortable retired life. GIC is taken out of personal interest because you get higher rate of interest on the savings through GIC.
  • When you invest in RSP you aim to reap the benefits after you retire while in case of GIC you aim to get money with interest after the completion of the term.


These differences between the two make it quite clear that both these are different types of investment plans and do not compete with each other because the intention of investing in both these plans are different.