Why Do International Students Need a Gic to Study in Canada?

Since the SDS program speeds up the processing of student visas, securing a GIC helps students obtain their study permits in a more timely manner. Without a GIC, students may have to apply through the regular study permit process, which can take significantly longer.

Studying in Canada is a dream for many international students, and securing a study permit is an essential step in that journey. One of the key financial requirements for obtaining a study permit under the Student Direct Stream (SDS) is a Guaranteed Investment Certificate (GIC). But what exactly is a GIC, and why is it important for students? In this guide, we will explore everything you need to know about a GIC, including its benefits, how to apply for one, and the best banks offering GICs in Canada.

What is a GIC?

A Guaranteed Investment Certificate (GIC) is a type of investment account that offers a fixed rate of return for a specified period. International students applying for a Canadian study permit under the SDS program must deposit a certain amount (usually CAD 10,000 or more) into a GIC account to demonstrate they have sufficient funds to support their living expenses in Canada.

Understanding the GIC

A Guaranteed Investment Certificate (GIC) is a financial instrument offered by Canadian banks and financial institutions. It is a short-term investment that provides a guaranteed return over a fixed period. International students applying under the Student Direct Stream (SDS) program, which facilitates faster visa processing for students from select countries, are required to purchase a GIC as proof of financial stability.

The GIC ensures that students have adequate funds to support themselves in Canada, covering their initial living expenses. The amount required typically stands at CAD 10,000, although it may vary slightly depending on the bank and region. This investment acts as a financial cushion, ensuring that students do not face immediate financial hardships upon arrival in Canada.

Benefits of a GIC for International Students:

  • Faster Study Permit Processing: SDS applicants with a GIC often experience quicker visa approvals.
  • Financial Security: Ensures students have access to funds for their expenses.
  • Safe Investment: GICs are low-risk and come with a guaranteed return.
  • Convenient Fund Access: The initial amount is partially available upon arrival, with the remainder distributed monthly.

Overall, a GIC simplifies financial planning for international students and enhances their chances of a smooth transition to studying in Canada.

How Does a GIC Work?

A GIC functions as follows:

  • The student deposits a minimum of CAD 10,000 (plus processing fees) into a GIC account at a participating Canadian bank.
  • Upon arrival in Canada, the student receives an initial lump sum (typically CAD 2,000) to cover immediate expenses.
  • The remaining amount is disbursed in equal monthly installments over 12 months, helping students manage living costs.
  • The bank provides a GIC certificate or an Investment Confirmation Letter, which is required for the visa application process.

Why Do International Students Need a GIC?

1. Visa Requirement Compliance

One of the primary reasons international students must obtain a GIC is to fulfill Canadian visa requirements. The Canadian government mandates that students demonstrate their ability to sustain themselves financially while studying in the country.

By purchasing a GIC, students provide tangible proof of funds, reducing the likelihood of visa rejection. The Immigration, Refugees and Citizenship Canada (IRCC) recognizes the GIC as an official document that ensures students have access to a steady stream of funds for their daily expenses, reducing financial risks.

2. Faster Processing Under the SDS Program

Canada’s Student Direct Stream (SDS) is a fast-track visa application process available to students from specific countries, including India, China, the Philippines, and Pakistan, among others. One of the primary eligibility criteria for the SDS program is purchasing a GIC from a recognized financial institution in Canada.

3. Financial Security and Stability

Moving to a new country for higher education is an exciting yet financially challenging experience. The cost of living, accommodation, and daily expenses can quickly add up, and having financial security is crucial.

A GIC ensures that students have access to a predetermined amount of funds, which are disbursed in monthly or periodic installments. This financial support prevents students from experiencing monetary difficulties upon their arrival and throughout their initial months in Canada.

4. Helps Manage Living Expenses

Living expenses in Canada, including rent, food, transportation, and other necessities, can be overwhelming for students who are unfamiliar with budgeting in a foreign country. The GIC provides a structured way to manage these expenses as the funds are disbursed systematically.

Typically, upon arrival in Canada, students receive an initial lump sum (around CAD 2,000), and the remaining amount is distributed in equal installments over 12 months. This arrangement helps students plan their monthly expenses and reduces the financial burden on their families back home.

5. Enhances Credibility with Canadian Banks

Opening a bank account in a foreign country can sometimes be challenging. However, when students purchase a GIC from a reputable Canadian financial institution, they establish a banking relationship even before arriving in Canada. This credibility helps them in multiple ways, including easier access to financial services such as credit cards, loans, and other banking facilities in the future.

Having a Canadian bank account with a GIC also makes it easier for students to receive money transfers from their families and manage their financial transactions efficiently.

6. Builds Financial Discipline

Many international students are young and may not have extensive experience managing finances independently. The structured disbursement of the GIC encourages financial discipline, ensuring that students spend wisely and plan their budgets effectively.

By receiving funds in fixed installments, students learn to allocate money for rent, groceries, utilities, and other essential expenses. This financial responsibility is crucial, as it prevents students from overspending and helps them build good financial habits for the future.

7. Acts as an Emergency Financial Backup

Studying abroad comes with unforeseen expenses, such as medical emergencies, unexpected travel needs, or academic material costs. The GIC acts as an emergency financial backup, ensuring that students have immediate access to funds when needed.

Instead of relying solely on their families or taking high-interest loans, students can use their GIC funds to address urgent financial requirements, reducing stress and allowing them to focus on their studies.

How to Apply for a GIC

Step 1: Choose a Bank

Many major banks in Canada offer GICs for international students. Some of the most popular options include:

  • Scotiabank
  • ICICI Bank Canada
  • HSBC Canada
  • Royal Bank of Canada (RBC)
  • CIBC (Canadian Imperial Bank of Commerce)

Step 2: Open a GIC Account

  • Visit the selected bank’s website and follow their instructions for opening a GIC account.
  • Submit the required documents, including your passport, study permit application, and proof of enrollment (if applicable).
  • Transfer the required funds (CAD 10,000 + processing fees) to your GIC account.

Step 3: Receive Your GIC Certificate

  • Once the transfer is complete, the bank will issue a GIC certificate or an Investment Confirmation Letter.
  • This document must be submitted along with your study permit application.

Step 4: Access Funds After Arrival

  • Upon reaching Canada, visit a local bank branch and provide identification to activate your GIC account.
  • Receive the initial CAD 2,000 immediately.
  • The remaining balance is disbursed in monthly installments over 12 months.

Common Mistakes to Avoid When Applying for a GIC

  1. Choosing the Wrong Bank: Research and compare different banks to find the one that best suits your needs.
  2. Not Checking Processing Time: Some banks process GIC applications faster than others. If your visa application is time-sensitive, choose a bank with quick processing.
  3. Providing Incorrect Documents: Ensure all required documents are accurate and up to date.
  4. Delaying Fund Transfer: Transferring money to your GIC account late can delay your visa application.
  5. Not Activating the GIC Upon Arrival: Visit your bank as soon as you arrive in Canada to activate your GIC account and access funds.

Frequently Asked Questions (FAQs)

1. Can I withdraw my GIC money before the 12 months?

No, the funds are structured to be released in installments. However, in some cases, banks may allow early withdrawal if you leave Canada.

2. What happens if my study permit is refused?

Most banks offer a refund policy in case your visa application is rejected. You may need to provide proof of visa refusal to get your money back.

3. Do I earn interest on my GIC?

Yes, but the interest rates vary by bank and are usually minimal. The main purpose of a GIC is to meet visa requirements, not to earn high returns.

4. Is a GIC mandatory for all international students in Canada?

A GIC is only required for students applying under the Student Direct Stream (SDS). If you apply through the Regular Stream, other financial proof options are available.

Conclusion

The requirement of a GIC for international students in Canada serves multiple purposes, from meeting visa requirements to ensuring financial stability. It not only expedites the study permit process through the SDS program but also helps students manage their living expenses efficiently.

By providing a structured financial plan, the GIC allows students to focus on their education without worrying about immediate financial hardships.

Additionally, it builds financial discipline, fosters a strong banking relationship, and serves as an emergency financial backup when required.

For any student planning to study in Canada, securing a GIC should be one of the top priorities. It not only fulfills immigration requirements but also paves the way for a smooth and financially secure transition to life in Canada. If you’re an aspiring student looking to study in Canada, ensure that you understand the GIC process and choose the right bank to make your journey hassle-free and successful.