When you invest in a GIC, you lend money to the financial institution for a predetermined period (term). In return, the institution guarantees to pay you the principal amount plus interest at the end of the term.

GIC terms can vary, but common durations include 1 year, 2 years, 3 years, 5 years, and more. The longer the term, the higher the interest rate typically offered.

Interest on GICs is usually calculated using a simple interest formula. The interest rate is applied to the principal amount, and the resulting interest is added to the principal at the end of the term.

GICs typically offer fixed interest rates. This means that the rate agreed upon at the beginning of the term remains constant throughout the investment period.

Yes, but it often comes with penalties. Early redemption might result in a reduced interest payout, or in some cases, no interest at all. There are also cashable GICs that allow you to redeem before maturity without penalties, but they usually offer lower interest rates.