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One of the big banks had a special offer on GICs recently – one year for 0.75 per cent, compared with a posted rate of 0.55 per cent.

Nothing I could say about low interest rates would top this illustration of investing futility. The cost of living rose 0.7 per cent in June on a year-over-year basis, which means this “special” GIC rate offers an after-inflation return of pretty much zero. Clearly, GIC investors need some special help to get through the next while.

Here are five suggestions:

1. Avoid the big banks

The big banks offer the lowest of low rates on GICs because they know there’s a segment of the population that, for all kinds of reasons, won’t shop the competition. These big-bank loyalists are taken advantage of with rates like the one in that special deal mentioned earlier. A rule for GIC investing: A special big-bank rate is unlikely to match the rates routinely offered by alternative banks, trust companies and credit unions.

2. Have a website bookmarked for handy rate comparisons

Two suggestions are Cannex and Canadian High Interest Savings Bank Accounts. Whatever financial firm you’re checking, always cross-reference with a look at these or other rate-comparison websites.

3. Try a deposit broker

Registered deposit brokers work in much the same way as mortgage brokers – they have relationships with a variety of firms and can shop the market in a way that’s difficult to do on your own. For example, a GIC issuer may have a temporary rate promotion that hasn’t been widely publicized. Or there may be a credit union you haven’t come across with market-leading rates.

4. Don’t get hung up on big-bank stability

Alternative banks issuing GICs are often members of Canada Deposit Insurance Corp., just like the big banks. That means up to $100,000 in combined principal and interest is covered in eligible deposits. Other online banks are operated by Manitoba credit unions, which offer deposit insurance through a provincial plan. Here’s my take on that type of deposit protection.

5. Think twice about locking in for five years

We have a fairly flat yield curve right now, which means that short-term interest rates are just a tick below long-term rates. Example from the late July GIC market: Tangerine was offering 0.95 per cent for one year, 1.15 per cent for three years and 1.25 per cent for five years.

Usually, you get a bigger reward for locking down money over a longer period. Until that happens, consider a three-year GIC ladder. That’s equal investments in terms of one through three years, with maturing one-year GICs renewed for a three-year term.

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