Why Banks love to Sell GICs

I'm going to start by saying GICs (Guaranteed Investment Contract or Guaranteed Interest Certificates) aren't bad. Just miss used. (and miss used about 98% of the time.)

The way the work is you agree to deposit your money for a predetermined time, called the term, in exchange for a fixed interest rate. Most terms are 6 months, one- two- three- five- or ten-year terms. The interest rates are usually the longer the term the higher the rate. An example is if you deposit $5000 for 5 years with a 2% interest rate you will make $100 per year. (I will explain the value and tax consequences in a future blogg -> Why not GICs)

Why banks love GICs is that it is easy money for them. Banks mainly make money by lending it out. Bank loans, Lines of Credit, Mortgages and the biggest money marker is Credit Cards.

Using Credit Cards as the example:
You go into the bank and deposit $10,000 into a 5 year GIC and agree to give you 2% a year.
I go into the bank and get a credit card with a $10,000 limit and they charge me 18%.
They are making 16% profit.

Now with profit margins like that why would banks show people how to using investments like Mutual Funds that only have profit margins of 1-2% with the MERs that can give them a return over the long run.