Fidelity is well-known as a brokerage firm offering retirement services, wealth management, life insurance, management of mutual funds and much more. Fidelity certificates of deposit (CDs) offer investments in a portfolio of products — something banks don’t do. And they’re available on the secondary market, but be careful with that added complexity because those trades could be subject to extra fees. Also, you must have a brokerage account with Fidelity to be eligible to open a CD.
Overview of Fidelity CDs
Fidelity offers brokered New-Issue and Secondary CDs. Its New-Issue CDs are competitive, offering up to 5.35% APY for 12 months, and the shortest three-month term offering up to 5.30%. These rates are much higher than the national average, as a three-month CD has an average rate of just 1.11%.
Fidelity’s brokered CDs are similar to bank-issued CDs in that they pay interest at a set rate and are FDIC-insured. But the main difference is that brokered CDs earn simple interest, whereas most bank-issued CDs compound interest. This means a brokered CD only earns interest on the principal — so you won’t earn interest on your interest.
The New-Issue CDs are sold at par, meaning that you’ll need at least $1,000. Fidelity also offers fractional CDs, where minimums can be lower, increasing in increments of $100.
Secondary CDs can be priced over or under their actual value, and the secondary market can incur trading fees of $1 per $1,000.
Fidelity New-Issue CD rates
Fidelity advertises top rates for new-issue CDs, but to view the most current rates, you’ll need a Fidelity account.
|CD term||APY||Minimum deposit|
Other types of CDs
Fidelity also offers secondary CDs and CD ladders. For secondary CDs, you’ll need a Fidelity account to view details, but APYs range around 0.74% to 5.71% and Fidelity rates change frequently.
The CD Ladder terms are one-year, two-year and five-year. With the one-year ladder, rates increase over time, around 5.25% to 5.30% APY. The two-year ladder starts out with around 5.30% APY and ends at around 5.10%. The five-year ladder has the biggest drop, starting out at 5.30% and ending at 4.55% APY in the last year, at the time of writing.
Fidelity’s CDs deposits, fees and details
|What it is||Details||How it compares|
|Minimum deposit||$1,000 for new-issue, all other deposit minimums vary.||This is average compared to other bank-issued CDs.|
|Term range||Typical, as most CDs have terms from three months to five years.|
|Early withdrawal penalties||Not explicitly stated, but CDs sold prior to maturity are subject to a mark-down and may be subject to a substantial gain or loss due to interest rate changes and other factors.||Most competitors list their early withdrawal penalties clearly.|
|Grace period||None||Fidelitly doesn’t have a grace period, and this is abnormal, as most CDs offer a 7- to 10-day grace period.|
Cashout and rollover details
Fidelity’s CDs don’t come with a grace period, so as soon as the CD matures, the interest earned is deposited into your Fidelity cash core account. Depending on the CD, interest is paid out once the term ends, or monthly, semiannually or annually.
Fidelity offers an Auto Roll Program, which lets you renew your CDs automatically for another term at your current rate. The program also allows for early withdrawals, but early withdrawals may be subject to significant gain or loss, as stated by Fidelity.
How much you can earn with a Fidelity CD
How Fidelity’s CDs and rates compare
You must have a Fidelity brokerage or retirement account to open a CD. Fidelity customers can access between 50 to 100 high-yield New-Issue CD offerings at any time and don’t have to pay a trading fee to purchase them.
Fidelity’s secondary CDs carry the most risk, since market prices are susceptible to fluctuations in interest rates and values. But unlike bank CDs, if you want to sell a Fidelity CD before maturity, you’ll pay a trading fee of $1 per $1,000.
FDIC’s insurance covers only a CD’s actual value, so if you buy a secondary CD for more than its actual value, that extra amount you paid isn’t covered by the FDIC.
Perhaps the biggest downside with Fidelity is the fact that its CDs are brokered. While the APYs are very competitive, they earn simple interest, so you may not earn as much over time compared to top CDs earning compound interest.
Compare Fidelity to competitor rates
Narrow down top CDs by APY and minimum deposits to find the best one for your financial goals. Select the Compare box on up to four providers to see their features side by side.
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