Last week, I moved my TFSA into a 90 day GIC. Why? I want to maximize my savings. My bank (ING Direct) is offering a special 2.5% interest rate on 90 day TFSA GICs, whereas the usual rate for TFSA savings accounts is 2.0%. The longer you lock in, the higher your interest rate (I have a 5 year RSP GIC that will mature in 2015 at 3% interest).
If you move your TFSA money from a regular savings account into a GIC, it doesn’t affect your contribution limits. The only catch is, if you cash it in before your redemption date, no interest is paid at all. I have some extra cash I could tap into if I had an emergency, but obviously if it came right to it, I wouldn’t mind missing out on the interest. My EF contributions to my regular TFSA savings account will continue as usual during the three months ($192.30 per paycheque). The GIC will redeem directly back into my TFSA.
Numbers: $5,431.32 moved into 90 day GIC. Value at redemption: $5,464.80. Redemption date: May 2, 2012. Interest to be paid: $33.48