Guaranteed Investment Certificate (GIC) for your study permit

How to choose the right Guaranteed Investment Certificate (GIC) for your study permit?

All international students who wish to study in Canada must meet the requirements set by the Canadian government. One of these requirements is the Guaranteed Investment Certificate (GIC), which proves that you can manage your finances in Canada. 

In this article, you will learn:

What is a Guaranteed Investment Certificate (GIC)?

GIC stands for Guaranteed Investment Certificate. It is proof of funds under the Student Direct Stream (SDS) program to show IRCC that you have sufficient funds to cover the cost of living in Canada

GIC is a risk-free investment product you can purchase from a Canadian bank. The bank guarantees your investment and pays interest on the principal for a fixed period (usually between 30 days and ten years). The funds are locked in for a specified time at a fixed or variable interest rate. The interest rate is directly proportional to the chosen period, i.e., the longer the period, the higher the interest rate.

How Is A GIC Different From A Regular Savings Account?

  • Interest rates on a GIC do not fluctuate unless you choose a variable interest rate.
  • GICs are generally not repayable. If you choose to break the non-redeemable GIC, you may be charged a penalty.

Benefits Of A Canada GIC For International Students

  • Low-risk and predictable returns
  • Short or Mid-term financial investment option
  • The principal amount is secured.

What is the Minimum GIC Amount for International Students? 

The minimum GIC amount is CAD 10,000 for a Canadian student visa 

You must deposit this amount with approved lenders registered with the Canadian Embassy. You can deposit between CAD 10,000 and CAD 50,000 into your savings accounts in Canada. 

The remaining amount will be used to open a non-redeemable GIC account from which you may receive a nominal amount plus interest for a fixed period.

Why do you need a GIC as an international student in Canada?

Canada demands GIC for the following reasons:

  1. To demonstrate proof of financial support for the SDS program

GIC serves as security to the Canadian government that you have enough money in a Canadian bank to cover the expenses of your stay.

Usually, the investment is for up to a year, and the recommended investment amount is CAD 10,000. However, if you want to study in Quebec, you need a GIC of CAD 11,000. You can access the investment once they are in Canada. 

  1. To cover living expenses in Canada

The cost of living for international students can be high. GIC may be beneficial to international students to cover some or all living expenses, including housing, utilities, groceries, cell phone, and entertainment costs 

Please Note: GIC cannot be used to cover your tuition and fees. You will also need to provide proof that you have paid your tuition for the first year of study.

  1. To receive a monthly income while studying in Canada 

You will receive a percentage of your investments as income in your bank account every month. This will allow you to manage your budget and finances in Canada as you settle into your new life in Canada.

  1. To easily access funds and the opportunity to earn interest

Many students do not qualify for the SDS program. However, they are required to show proof of financial support for their application for a study permit. In such cases, they provide proof of funds in the form of a student loan, scholarship, or other forms of funding. This type of proof is complicated. However, opening a GIC makes it easier to access your money once you arrive in Canada and allows you to earn interest on your money.

How does an international student GIC work?

Open a GIC account

Once you receive an acceptance letter from a Canadian learning institution, you will need a Guaranteed Investment Certificate (GIC) to apply for a study permit through the Student Direct Program

You can register for an investment account online from your home country and transfer funds to purchase a GIC. To qualify for the SDS program, the GIC must have a term of one year (non-redeemable) and an amount of CAD 10,000 (or CAD 11,000 for Quebec studies). 

Once you have transferred the money to the bank and purchased a GIC, you will receive an investment confirmation or document with the details of the GIC contributions.

Apply for a study permit through SDS

Now, you need to attach the GIC Investment Certificate as proof of funds with your study permit application. Along with it, you need to provide the following:

  1. proof of your residency in an SDS-eligible country;
  2. your acceptance letter from a post-secondary learning institution in Canada;
  3. proof of tuition fee payment for the first year of your study program; and
  4. an eligible language test (i.e., IELTS or TEF for French) results. 

You may also need a medical exam and police certificate to apply for a study permit.

Access funds after arrival in Canada

One of the most important things you should do when you arrive in Canada is to visit your bank and open a student account at a Canadian bank. Verify your identity, and confirm the details of your account (usually a chequing account) into which you want to deposit your GIC payments. Finally, give the bank the payment instructions for the deposits.

Once the process is complete, you can redeem your initial GIC for its full value (principal investment and accrued interest). An initial payment of CAD 2,000 will be credited to your deposit account, and the balance will be invested in a new GIC.

Receive monthly income from GIC

The principal amount of your GIC is split into 12 equal payments. Now, every month for one year, you will receive the money along with interest to cover your living expenses in Canada as an international student.

Documents Required During the GIC Registration Process

Here’s the list of documents that you require for registration of your GIC: 

  1. Investment Directions confirmation letter;
  2. Valid passport;
  3. Letter of enrollment from previous university/College;
  4. Offer letter and study permit.

Please Note: The registration, documentation, and verification documents may vary slightly depending on the bank offering the GIC facility.

Documents Required During Refund Banks

Here’s the list of documents that you require to claim a refund of your GIC: 

  1. You Bank’s Investment account number;
  2. Wire return bank account details;
  3. Original case number and application letter stating the reason for refund.

Once all of the above documents have been submitted and reviewed, your bank will initiate the refund process. Typically, this process can take up to four weeks.

Please Note: The refund documents may vary slightly depending on the bank offering the GIC facility.

Designated GIC banks in India

You can only purchase GIC at some banks. There are many Indian banks approved to offer GIC for Canada. These include: 

  • ICICI bank
  • Canadian Imperial Bank of Commerce (CIBC)
  • SBI Canada
  • Scotiabank
  • HSBC Bank of Canada

Tips on choosing the right GIC as an international student

Choose a bank with a good presence in Canada

Do not open GICs with your home bank operating in Canada through a subsidiary or affiliate bank. This can make it difficult to access your funds once you reach Canada.

Always choose a bank with a good presence in the province where you will be living so you can find a branch close to where you will be staying in Canada.

Evaluate student bank accounts offered by the bank

You need a chequing account to receive money from GIC each month. Almost all international students open a chequing account with the bank where they have GIC. This way, transactions become seamless, and your funds are consolidated. 

Many banks in Canada offer special student banking products to meet the financial needs of students. As a newcomer, you can learn about these products to find the right bank account in Canada.

IELTS for Canada

Compare interest rates on GIC

Different banks offer different interest rates for GIC. Always choose the most favorable (higher) interest rate before opening your GIC.

Compare GIC fees

All banks charge a processing fee for opening an international student GIC. Generally, the fee is a few hundred dollars. Choose a bank with a lower processing fee. The fee is deducted from the amount you deposit. Therefore, always consider including the fee for the amount you transfer to the bank when opening your GIC.

Look out for payment schedules

All Canadian banks have different payout schedules for GICs. For example, one bank pays the GIC amount in eight installments of 1000 CAD every 45 days. Another bank may make an initial deposit of $2,000 followed by 12 equal monthly payments. 

As an international student, a higher initial payment would be ideal as you will need the money to set up your housing and purchase essential items when you reach Canada.

Flexibility to deposit more funds

Some banks allow you to deposit more than the minimum required amount into your GIC (more than the CAD 10,000 required). The minimum amount is the average expense that you might incur in Canada. However, if you need more financial support, it is beneficial to have additional funds available.

The exchange rate of INR to CAD increases almost every year. Another advantage of depositing more money is that you can save on currency exchange fees by transferring considerable funds.

Convenient application process and processing time

Convenience is the key. Choose a bank that offers a convenient application process. A bank that offers an online application for GIC would be best. Then, when you get to Canada, all you have to do is make an appointment at your nearest bank branch to complete the process. 

Similarly, the faster the application process, the better. Banks that offer faster processing times may be a better choice for your international student GIC.

Flexible refund of GIC investment

There is a slight chance that your application for a study permit will be denied or that you will decide not to study in Canada. In such cases, you would want to get a refund for your GIC investment. Therefore, make sure your bank offers a simple, convenient refund process for international student GICs.

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