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Investors willing to lock money down for one to five years are being rewarded with GIC rates not seen in years.

But what if you don’t want to commit for at least a year or you think you may have a need to access your money? A few players in the market for guaranteed investment certificates have an option for you – the cashable GIC.

There’s little point considering cashable GICs when you can get comparable returns from high interest savings accounts, which cost nothing and offer complete liquidity. You can transfer money in and out any time on your phone or computer. Today, though, cashable GICs are up from microscopic levels a few months ago and available with rates that beat many high interest accounts.

Oaken Financial’s cashable one-year GIC has a rate of 1.7 per cent after 30 days and 2 per cent after 90 days. Royal Bank of Canada recently offered a special 1.8 per cent rate on a cashable one-year GIC, which compared with a posted rate of 0.75 per cent. Both of these GICs were available for non-registered accounts.

A couple of points about cashable GICs – they’re not always offered by the alternative banks and credit unions with the best rates, and there’s a significant rate penalty for having the option to cash out.

Non-redeemable GICs are hard, if not impossible, to cash out of before maturity and you should expect a penalty fee if there’s a way to exit early. GIC issuers are strict about this because they precisely match funds taken in from GICs with money lent out for mortgages and other purposes.

The best non-redeemable one-year GIC rates are in the 3 to 3.65 per cent range. Why consider a cashable GIC then? Because rates on high interest accounts aren’t that competitive for the most part.

A rate of 1.5 per cent is widely available from savings accounts offered by alternative banks, and a few go up to 1.7 per cent and 1.75 per cent. But the best rate of 2.4 per cent is available from Saven Financial, which serves Ontario residents. Saven is a division of FirstOntario Credit Union.

Cashable GICs will not score you a rate to celebrate, but they do offer at least something for the investor who can’t or won’t lock money down.

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