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
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.
[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.
|Best CD Rate (APY)
|6 and 9 months
The table below compares Fidelity’s CD rates with some of the best CD rates offered by popular online banks.
|Best CD Rate (APY)
|9, 14 and 18 months
|6 and 9 months
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.
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.