Parking $75K for 10 Months: GIC vs Savings Promo

A Reddit user on the RFD forums has $75,000 that needs to stay liquid until a mortgage renewal in May 2027. The money is earmarked for a lump-sum payment at renewal. The user already holds a Tangerine account, which disqualifies them from Tangerine's promotional 4.5% five-month e-savings rate. RBC, where they bank, offers a similar short-term promo that drops to 0.05% after three months. Redeemable GICs are yielding around 2%.

The obvious first read is to chase a high-interest savings account promo at a bank where the user is not already a client. Several Canadian banks offer 4% or better on new deposits for three to five months. The catch is that the user would need to open a new account, move the money, and then move it again when the promo expires. That is fine for a disciplined saver. The user has to track expiry dates and avoid letting the cash fall into the base rate.

The better market read is that the user does not need to chase promos at all. A one-year non-redeemable GIC at a Big Five bank pays roughly 3.5% to 4% right now, depending on the institution and the amount. The user's timeline is 10 months, not 12. Most banks allow early redemption with a penalty of 90 days' interest. If the user locks in a 4% GIC and needs the money at month 10, the penalty eats about 1% of the yield. That leaves a net of roughly 3% annualized. That beats the 2% on a redeemable GIC and avoids the hassle of account hopping.

The risk is that rates move higher before May 2027. If the Bank of Canada cuts rates between now and then, the GIC lock-in looks good. If the BoC holds or hikes, the user is stuck at 4% while new promos might offer 4.5% or 5%. The user's mortgage rate at renewal is the bigger variable. A 25-basis-point difference on the GIC yield is noise compared to a 50-basis-point move on a $220,000 mortgage.

The simplest path is to take the RBC promo for three months, then move the cash to a one-year GIC at another institution. That captures the promo rate for the first quarter and locks in a decent rate for the remaining seven months. The user loses maybe 0.5% in total yield compared to the perfect promo-chasing strategy. They gain simplicity and avoid the risk of forgetting to move the money.

The user's RBC stock page shows an Alpha Score of 53, which is mixed. That is not directly relevant to the deposit decision. It is worth noting that RBC's deposit rates are not the most competitive in the market right now. The user should compare rates at EQ Bank, Oaken Financial, or a credit union before committing.

The final fact: the user's mortgage renewal date is May 2027. That is 10 months from the post date. The penalty on a one-year GIC is 90 days' interest, which is roughly 1% of principal. If the user locks in 4% for one year and breaks at month 10, the net yield is about 3%. That is better than the 2% redeemable GIC and better than the base rate at RBC after the promo expires.