APY GUY: Maximize Your Savings & Earnings

Fidelity

Fidelity CD Rates – Now up to 5.40% APY!

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Fidelity is a multi-national financial services corporation based out of Boston, Massachusetts. They are one of the top 10 AMC (asset management companies) in the world administering $11.7 trillion in total assets.

Fidelity offers a wide range of services, products and tools to suit investors of varying experience levels and risk tolerances.

In this review we will focus on the brokered CDs offered through Fidelity. These can be found under their fixed income and bonds category.

It is important to note that Fidelity is not a bank, but a brokerage firm. Therefore Fidelity does not issue any certificates of deposit themselves, but rather “brokers” or resells them to their clients. The deposits are still obligations of the issuing bank, and thus come with FDIC-insurance up to $250,000 per depositor. That said, because Fidelity is a brokerage service, you can hold multiple CDs in your brokerage account with them, effectively expanding your FDIC coverage past the $250,000 limit. This is also true for their cash management account which allows for FDIC coverage up to $1.25 million.

You can open new issue CDs and/or secondary market CDs through Fidelity. New issue CDs are typically sold at par and clients do not pay a trading fee to purchase them. Purchases (and sales) of secondary CDs incur a trading fee of $1 per CD (1 CD = $1,000 par value). Download Fidelity’s CD disclosure document for a full understanding of their terms and conditions.

Fidelity CD Rates + Account Details

image credit: fidelity.com

Fidelity offers ten standard term New Issue CDs ranging from 3 months to 5 years that come with a minimum deposit requirement of $1,000.

CD Rates

TermAPY
3 months5.35%
6 months5.40%
9 months5.40%
1 year5.35%
18 month5.30%
2 years5.15%
3 years4.90%
4 years4.75%
5 years4.65%
APY = Annual Percentage Yield

[The CD rates displayed above were surveyed on September 6, 2023.]

To give Fidelity’s new issue certificate of deposit rates (shown in the table above) some context, the current national average for 12 month and 5 year CDs sit at just 1.76% and 1.41% APY, respectively, according to FDIC data, while the top rates from online banks are hovering around 5.50% and 4.50% APY for the same respective terms.

How do Fidelity’s CD Rates Compare?

Take a look at the table below to compare Fidelity’s best CD rates with the top CD rates offered by other major brokerages.

BrokerageCD TermBest CD Rate (APY)
Charles Schwab10-18 months5.70%
Edward Jones6 months5.40%
Morgan Stanley6 months5.37%
Vanguard13-18 months5.70%
Fidelity6 and 9 months5.40%
These CD rates were surveyed on September 6, 2023.

The table below compares Fidelity’s CD rates with some of the best CD rates offered by popular online banks.

BankCD TermBest CD Rate (APY)
Ally Bank9, 14 and 18 months5.00%
Capital One15 months5.15%
Synchrony Bank16 months5.25%
Fidelity6 and 9 months5.40%
These CD rates were surveyed on September 6, 2023.

How Much Can You Earn with a Fidelity CD?

The amount of money you can earn with a Fidelity CD is going to depend on your deposit size and the CD you choose. The table below shows how much you’d earn in total interest payments with a $50,000 deposit on a handful of Fidelity’s CDs.

CD TermAPYTotal Earnings
6 months5.40%$1,332.25
12 months5.35%$2,675.00
2 years5.15%$5,282.61
5 years4.65%$12,757.58
Total Earnings = The sum of all interest payments through maturity.

How is Interest Calculated?

Interest on new issue Fidelity CDs do not compound. This is true with most brokered CDs as they require an immediate distribution of interest.

Interest payments will go into your Fidelity brokerage account as opposed to going back into the CD for further compounding.

Fidelity CDs that are purchased on the secondary market may be based on other interest rate calculations. You will need to contact the issuing bank or credit union with questions concerning the interest rate calculation on a secondary market CD.

Fidelity Auto Roll Program

Fidelity also has an “Auto Roll Program” that comes with some helpful features. The most notable being the ability to make early withdrawals on your CD without incurring steep fees. This is in contrast to bank or credit union CDs which generally take a portion of your interest as a fine.

The second stand-out feature of the Auto Roll Program is that it allows you to sell part of your CD (or add to it) prior to its maturity date.

You can also keep track of your earnings, set up alerts and auto-renew your CDs based on your chosen asset allocation.

If you would not like to be a part of the Auto Roll Program, you may cancel at any time.

Fidelity Brokered CDs: Pros and Cons

Brokered CDs offered through Fidelity come with many benefits and few downsides for those looking for FDIC insured accounts with high yields.

✅ For starters, the current rates offered (shown above) are more competitive than those found at top online banks and credit unions.

✅ The second major benefit is liquidity. If you need your funds prior to maturity you can simply sell it during any trading day on the open market. Keep in mind though that the market prices will fluctuate based on rates. This means it’s also possible to sell your deposit for less (or more) than you purchased it for.

For example, if you open a 5 year deposit and need the funds after year 2, during which time interest rates have risen considerably, you may have a tough time selling your deposit for your full purchase price because consumers can get better rates through new issue CDs.

Conversely, if you purchase a 5 year deposit and rates drop significantly (which they have) then you may find investors willing to offer a premium on your CD in the secondary market.

🛑 While new CDs don’t come with any fees, CDs purchased on the secondary market will be subject to a trading fee similar to buying or selling a stock.

🛑 You must have a taxable brokerage account or an Individual Retirement Account (IRA) with Fidelity to hold your CDs. This is also where your Fidelity CD’s interest payments will be deposited.

🛑 CDs may be callable, meaning the issuer may redeem the CD on a set date prior to maturity. Interest and principal will be paid in full or partially depending on whether the entire CD is called or just a portion of it. You’ll need to check with the issuer for the call schedule to see the exact call date(s).

Fidelity Brokered CDs FAQs

Still have questions about the brokered CDs offered through Fidelity? See what other consumers are asking around the web as well as our responses below.

Are Fidelity CDs FDIC Insured?

Yes. Fidelity only brokers CDs from FDIC-insured banks. Fidelity clients are covered by the FDIC up to $250,000 per depositor.

Is it Safe to Buy a CD on Fidelity?

Yes. Fidelity is one of the top 3 largest brokerages in the U.S. Plus, they only purchase CDs from federally insured institutions that they then resell to their clients.

How are Fidelity’s CD Rates so High?

Like many brokerages, Fidelity is able to offer more competitive CD rates to their clients because they buy CDs in bulk from a number of different institutions. This gives them more leverage to secure higher rates as opposed to one individual going to their own bank or credit union for a CD.

Can You Build a CD Ladder with Fidelity CDs?

Yes. Not only can you build CD ladders with Fidelity, but they also have a modeling tool that can help you construct them. You can build 1 year, 2 year and 5 year CD ladders or build customizable ones. Learn more about CD ladders with Fidelity here.

Does Fidelity Offer a Money Market Account?

Fidelity does not offer a standard FDIC insured money market account. They do, however, have 3 major money market funds (not FDIC insured) that invest in low risk securities. These are the Fidelity Government Money Market Fund (SPAXX), the Prime Fidelity Money Market Fund (SPRXX) and Fidelity Municipal Money Market Fund (FTEXX).

They also have a cash management account that leverages FDIC insurance from multiple banks to provide up to $1.25m in coverage. The APY (annual percentage yield) on this account sits at 2.72% per the time of this writing.

Fidelity Cash Management Account – Up to 2.21% APY!

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Fidelity Investments Inc. is a multinational investment management corporation offering a wide range of personal and professional investment products and advising options.

This financial services company was established in 1946 and is now the fifth largest asset management firm in the world controlling more than $2 trillion in assets.

Rated the #1 online broker of 2020 by both Barron’s and Investor’s Business Daily, Fidelity is also considered to be an overall sound choice for cash management accounts by review publications and customers alike.

If you’re not familiar with cash management accounts, they are all-in-one accounts that combine features of savings accounts, checking accounts and investment accounts all in one place, with one institution.

Cash management accounts let you capitalize on convenience and security and this brokerage firm offers one with several notable perks. If you want a cash management account that can do more than the standard checking, savings, or investment account can, here’s what you’ll need to know about the cash management account offered through Fidelity.

About the Fidelity Cash Management Account

image credit: fidelity.com

Fidelity Cash Management accounts are brokerage accounts, not bank accounts. This makes managing your finances easier by allowing you to both save and invest under the same roof.

That said, you can also use this much like you would a checking account since it offers:

  1. ATM cash access,
  2. a debit card,
  3. the option for bill pay,
  4. and unlimited check writing capabilities. 

Your uninvested balance earns interest similar to an online savings account or you can choose to park your cash in other low-risk investment options like a money market account or CD.

Now let’s get under the hood and see how these accounts actually work.

Remember these are not deposit accounts nor bank accounts.

In fact, the cash you put in your Fidelity Cash Management account doesn’t actually stay with Fidelity at all (though it can be accessed through Fidelity).

Instead, Fidelity partners with other FDIC-insured banks, called Program Banks, and carries out what is known as “FDIC-Insured Deposit Sweep” or simply “Sweep” (a practice typical of cash management accounts).

Basically, Fidelity moves your money into different interest-bearing deposit accounts with other institutions so that it can leverage their FDIC insurance and maximize your coverage.

Your money will be swept into Program Banks chosen by Fidelity and you will be notified about which have been selected for you when you are presented with your Program Bank List. There are always going to be a minimum of five different banks available for Sweep, but exactly which ones are available to participate depends on demand and other factors. 

This practice of sweeping makes it possible for Fidelity Cash Management accounts to be FDIC insured up to $1.25 million. Most deposit products are only insured up to $250,000, but because your money will be distributed across multiple institutions and insured separately by the FDIC, coverage can extend well beyond this typical maximum. However, the coverage limit per bank is still $250,000, which is why you may have up to five different Program Banks. 

Fidelity will automatically sweep the first $245,000 of your cash management account balance into the first bank on your Program Bank List, reserving $5,000 for accrued interest, then the next $245,000 into your second bank, and so on. Just know that it is your responsibility to make sure that your cash is always within coverage limits at each Program Bank. If you do find that you’ve, for some reason, exceeded FDIC coverage limits or you wish to change one or more of your banks, call Fidelity at 800-931-9987 to update your Program Bank list as needed. 

Remember that you are not a customer with Program Banks but with Fidelity. If you are already a customer with a Program Bank beforehand, keep in mind that your aggregate balance will be used to assess coverage.

You will also need a Fidelity investment account in order to open a Cash Management account.

Fidelity Cash Management Account Rate + Details

The Fidelity Cash Management Account has no minimum balance requirements and no monthly maintenance fees.

Rates

BalanceAPY
$0 – $99,999.992.21%
$100,000 +2.21%
APY = Annual Percentage Yield

To put this yield into perspective, the current national average for a savings account is 0.30% APY and just 0.05% APY for interest-bearing checking accounts, according to FDIC data.

That said, some online banks are now featuring APY’s above 4.00% and some brokerages offering savings accounts, like the E-Trade Premium Savings account are offering 3.25% APY. See more comparisons in the table below.

Interest compounds daily and credits monthly.

You can use this account to invest in Fidelity CDs, mutual funds, fixed-income instruments, or MMAs as well, but the current rates won’t be too enticing.

According to Fidelity, the Fidelity Cash Management account is meant to supplement, not replace, your Fidelity brokerage account, which does not allow for spending but has many more investment options to choose from.

The Fidelity Debit Card, issued by PNC Bank, can be used at any Fidelity ATM or out-of-network ATM worldwide and all ATM charges made from your cash management account will be fully reimbursed. It can also be linked to Apple Pay.

You can use your Cash Management account to enroll in Fidelity BillPay, write as many checks as you want, deposit checks, and make transfers between this and external accounts, and more—all at no cost to you.

How Does it Compare

There’s quite a few cash management accounts on the market to choose from and their feature sets and interest rates vary widely.

Below is our rundown of the most popular cash management accounts of 2021 benchmarked with Fidelity on top features and yield.

Institution/AccountFDIC insuranceDebit CardAPY
SoFi Money$1.5 millionYes3.75%
Wealthfront Cash Account$1 millionNo3.80%
Betterment Everyday Cash Reserve$1 million+Yes3.75%
Aspiration Spend & Save$2 millionYes5.00%
Affirm Savings$250kNo3.50%
Fidelity Cash Management$1.25 millionYes2.21%
APY = Annual Percentage Yield

Many of the cash management accounts that come with a debit card also feature ATM fee reimbursements worldwide. The Fidelity Cash management account offers an unlimited amount of these but every institution and account is different. You’ll have to check with the institution’s account details page for more information.

Reviews and Customer Sentiment

Overall customer satisfaction is at 4.4 out of 5 stars on the Fidelity site. Customers appreciate how comprehensive Fidelity’s product lineup and website are and the general consensus is that the online banking platform is easy-to-use and does the job.

In terms of the cash management account, the disadvantages are that the product isn’t as competitive as it could be in terms of rates and APY and Fidelity doesn’t have many branches. In addition, there have been reports of transactions into and out of cash management accounts taking longer to go through than what is typical. Some customers have also expressed frustration in getting support from Fidelity.

The Fidelity Cash Management account was given a rating of 4.5 stars out of 5 on NerdWallet because it has good ATM coverage, ATM reimbursements, and no monthly fees, but the account is dinged for not earning a better rate of return.

There are less than 200 Fidelity Investor Centers or branches across the country. This limited in-person branch access might not be what you want from a bank, but Fidelity makes up for this in other ways. For one, customer support can be reached 24/7 and the Fidelity app is very highly rated on the App Store — 4.8 stars — and Google Play — 4.2 stars. Call (800) 343-3548 to reach a representative at any time or day of the week or reach out via the site’s convenient live chat feature.

Fidelity Youth Account Review – $50 Sign Up Bonus!

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Teens get a $50 bonus for activating their new account!

Fidelity Investments offers a wide variety of investment accounts and financial services, and now they cater to teens too. With the new Fidelity Youth Account, teens can spend, save, and invest their own money with a trusted corporation that’s been around since 1946.

This product just launched in May of this year, and you can expect to hear about it often in the coming months. The Fidelity Youth Account is a fee-free financial account with a lot of things going for it that’s great for young investors, and definitely one to consider as you look at account options for kids and teens. Will this be the youth brokerage account for you?

Related: See how the Fidelity Youth Account and debit card stack up against the competition in our guide to today’s best debit cards for kids and teens!

$50 Sign Up Bonus – Limited Time Offer

For a limited time Fidelity is helping teens jumpstart their financial journey by offering them $50 just for signing up!

The $50 will be deposited directly into your teens account within 10 calendar days after they have downloaded the Fidelity Mobile App and activated their account. This entails creating a username/password, and logging into the mobile app and accepting account agreements.

They will get a push notification on their phone once the $50 has been deposited.

Who’s It For

Average age: 13 to 17

Good candidate: Teens who are serious about learning to invest and grow their wealth.

The Fidelity Youth Account is a brokerage account that teaches teens to manage and invest their own money. It provides them with real opportunities to buy and sell shares in publicly owned U.S. companies. 

Children under the age of 13 are prohibited from having an account opened in their name, and new customers older than 18 may not open one either. When users turn 18, they are eligible to change their youth brokerage account to a standard brokerage account. Parents or guardians are removed from the account automatically.

Please note that only parents who already have a brokerage relationship with Fidelity to qualify for this product. A brokerage account, cash management account, or IRA with Fidelity would make you eligible for the Fidelity Youth Account.

Features and Benefits

In addition to being unique because it is a brokerage account rather than a typical checking account, the Fidelity Youth Account stands out from other financial products for teens because it gives teens more control than parents.

This is not a joint checking account—teens are the account holders and managers. Parents are there to supervise and support their kids, serving as the point of contact between them and Fidelity. All investment and spending decisions are to be made by the teen associated with the account, and they do not need the consent of their parent or guardian in most instances.

For Parents

After opening an account for their child, the parent of a kid with a Fidelity Youth Account becomes known as the Interested Party for that account and hands over most responsibilities. 

Parents are granted “inquiry access” to see how their child is spending their money and what they invest in. They are not asked to approve transactions or investments. Parents can set up alerts to receive real-time push notifications about spending activity and investing.

The parent is also the Trusted Contact in charge of communicating with Fidelity Investments. They are financially liable if their teen fails to make payments and can go to Fidelity with any questions or concerns about details of the account. They must also consent to certain privacy permissions that their child may enable such as Fidelity MyVoice.

This is essentially the extent of parent or guardian involvement, but parents do have ultimate say over account closures too. Parents must open this account for their child and they may close it or have their debit card deactivated. They reserve the right to request these things of Fidelity at any time.

Unlike other deposit accounts for kids, parents don’t have to be the ones to fund their children’s Fidelity Youth Accounts. They may fund it from their own Fidelity brokerage account, but they may go a different route.

For Kids

There are many ways to fund this account, which can be done by either a teen or their parents. The parent may transfer money from a linked Fidelity retail brokerage account or the parent or teen may use any of the following funding methods:

  • Wire transfer
  • ACH transfer (if the teen is the account owner or a joint account owner)
  • Mobile check deposit
  • Paper check deposit

Teens can also link a digital payment app such as PayPal, Venmo, or CashApp and fund their account that way. If a teen is employed, they can set up a direct deposit from their employer into this account.

Fidelity recommends against exceeding $30,000 in deposits in a year.

💸 Spend: Fidelity Youth Accounts, of course, come with debit cards. This is your average debit card, issued by PNC Bank, that can be used in-person or online for transactions and cash withdrawals. It can also be linked to payment apps like PayPal and Venmo for easy fund transfers. This debit card can be managed through the app and used anywhere Visa is accepted.

💰 Save: Teens can also save their money in their account by simply choosing not to invest it. Fidelity may move this money into a sweep account to earn interest, but it is never locked from teens. There is no charge for withdrawing and spending saved money.

📈 Invest: Teens are empowered to make all investing decisions for themselves, but users are limited to certain types of securities, chosen by Fidelity. The first type of security is exchange-listed National Market Securities or NMS securities such as stocks and ETFs. The second is Fidelity mutual fund shares, including Fidelity money market mutual funds, ZERO expense ratio index mutual funds, and municipal bond funds.

All other types of securities, such as international stocks and third-party mutual funds, as well as certain subsets of NMS securities are not able to be traded with a Fidelity Youth Account, but there is no shortage of options. There are no limits on the amount of money that can be traded in one transaction and teens can invest with as little as $1 at a time in fractional shares.

Teens may invest as actively or as passively as they’d like. They will not have an account manager making decisions for them, so they’ll need to do their own market research.

If a teen doesn’t know much about investing, Fidelity recommends that they go through the provided educational resources in the Youth Learning Center with their parents or guardians. These resources include articles that cover financial literacy topics in depth, from the basics of spending and saving to the nuances of investing.

Teens can talk with Fidelity investment professionals to ask questions about their account, but they will need to have a good understanding of the risks associated with investing to be successful with this account.

How Much Does the Fidelity Youth Account Cost

Fees: no fees for low balance, no account maintenance fees, no ATM fees, 1% fee for foreign transactions.

There are no subscription fees for the Fidelity Youth Account or other fees for using and keeping the account. However, there are investing fees. These are specific to each security a teen trades.

Users are reimbursed for fees they incur when using their Fidelity Youth Account debit card at any domestic ATM. There is no limit on reimbursements.

There are no minimum balance requirements for the investment account itself, but there may be some different securities available for purchase.

Benefits of Fidelity Over Competitors

One of the great things about this account is that it empowers teens to actually invest. The Fidelity Youth Account is a much more comprehensive investment product than we’ve seen catered toward kids and teens before. Other deposit accounts for kids simply offer investing as an option, but on a much smaller scale and with far fewer options. 

This account is also inexpensive compared to the competition. There are no subscription fees or account maintenance fees, and securities are mostly either low-fee or fee-free. Many are $0 commission and there are no fees for advisory.

It also pays to work with a high-profile financial services company like Fidelity Investments. Fidelity has a track record of success and high customer satisfaction.

Potential Drawbacks

Parents need to be Fidelity customers in order to open an account for their teens. A lot of people won’t be able to open a Fidelity Youth Account because of this, and Fidelity should consider opening it up to a larger population of interested candidates.

Because this is a proper investment account, there are going to be typical drawbacks to consider. For example, taxes. Your child will be responsible for paying taxes on their earnings and covering any fees associated with their investments. There is also the possibility that they may lose money, in which case they would need to cover their losses. If a child is unable to cover their losses or pay fees, their parent or guardian is financially responsible for them.

Another con to this account, for some families, is that it doesn’t give parents a lot of control. This is pretty much the point as this brokerage account is meant to give teens financial independence, but this might not be what you’re looking for if you want account management capabilities. For example, a parent may not set spending limits for their child.

Consumer Sentiment

As this is a new account offering, there are few consumer reviews available for it at this point. So, let’s take a look at what real customers have to say about working with Fidelity Investments as a whole.

Positive reviews about Fidelity Investments tend to center around the company’s extensive list of product offerings and helpful resources. Many Fidelity users today are long-time customers. Negative reviews complain about account restrictions, primarily in instances of suspected fraud, which can take a while to resolve.

The Fidelity mobile app is highly rated. It has a rating of 4.8 out of 5 stars in the App Store and 4.3 out of 5 stars on Google Play. The app is sophisticated and comprehensive but still easy to use.

Fidelity’s customer service is another strong point. They have a robust team of representatives working for them, and this results in short wait times and good rates of problem resolution. In a 2020 study by J.D. Power, Fidelity Investments ranked as the second best full-service investor for overall customer satisfaction.

Is It Safe

In terms of security, the Fidelity Youth Account is pretty safe. All account securities are SIPC insured up to $500,000 and uninvested account funds are insured up to $250,000. 

Fidelity may share a teen’s personal information with third-party service providers and may use this information to make product suggestions.

It is up to a parent and their child to monitor their account for suspicious activity and report it to Fidelity promptly.

As for the safety of investments, this is, of course, not guaranteed. Fidelity doesn’t do anything to make the stocks a teen can invest in safer, so a child exposes themselves to the risks and losses any other investor does.

How to Sign Up

Again, you must have a brokerage account with Fidelity to submit an application for a Fidelity Youth Account. If you do, you can register for this account online or through the Fidelity app by providing identity verification for yourself and your child. Then, after your application has been processed, your teen can install the app, activate their account, and fund it.

Final Thoughts

If you value working with reputable companies and want your child to get started growing their wealth early, this account is probably one of your best options. The Fidelity Youth Account might be right for you and your family if you want to give your child real experiences with investing. And rather than having a limited range of companies to invest in and no control over how securities are traded, Fidelity Youth Account users can invest in the same companies that users with standard brokerage accounts may invest in.

Don’t let the fact that this account is new scare you away, as Fidelity has a reputation for delivering quality service and highly rated financial products. But if you’re looking for more parental control or you’re just not ready for your child to start investing yet, this account is not for you.