If one searches for GICs (Canadian equivalent of a term deposit) on the Canadian financial service comparison site ratehub.ca for 3 year deposits with 10 000 CAD as investment capital, one will come across many GICs that offer returns of 4.3% per annum.

Conversely, if one searches for Festgeld (Time-deposits) on the German comparison site Check24 for a 3 year deposit with 10 000 Euro as investment capital, the best offer is only 1.43% return per annum.

Likewise, in the USA, the comparison site https://www.bankrate.com/ shows the best CD (Certificate of Deposit) rate of 2.5% per annum based on a 3 year term.


  • Why are rates in Canada ~1.75 times higher than the US and ~3 times higher than in the EU?
  • If a person had bank accounts in each of the three countries above, is there any reason why that person wouldn't store all their cash investments in Canada?
  • Would we expect the above discrepancies to continue to exist 5 or 10 years into the future?
  • Is the discrepancy in these return rates for term deposits driven by differences in the corresponding central bank's lending rate?


  • The capital of term deposits is subject to government deposit insurance in all of the 3 countries above.
  • The CAD, the USD and the Euro are generally considered stable currencies. I.e. the long-term trendline does not suggest that one currency is appreciating/depreciating relative to others in the long term.
  • Inflation is comparable in all three locations.

All searches done on June 5, 2022

  • Look at US 'I-Bonds'. They are government backed and give over 9% guaranteed right now. There are always different products for different situations and different people.
    – Aganju
    Commented Jun 5, 2022 at 21:43

1 Answer 1


CD-style deposits are usually bank-offered, and banks make them as they want.
A major component of their decision process is how much money the bank currently wants to get in, to lend it out for mortgages etc. If the bank needs money, they offer higher rates; if they have enough or too much, they offer lower rates. The bank next door might have a different situation and therefore very different rates.

Specifically, the Canadian mortgage market is quite different currently than the overheated US market, and US banks could get 'free' (near 0%) money from the Feds for the last years, so why would they pay customers for their money?

You can get a better comparison between countries when you compare government bond rates; those are not influenced by specific bank's situation.

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