Fidelity’s certificates of deposit differ from traditional bank CDs in that they’re brokered CDs, which are CDs issued by banks but available only to brokerage customers.
Below, you can learn about Fidelity CD rates and how they compare.
How Fidelity CD’s Work
Getting brokered CD’s is a more complex process than opening bank CD’s:
- An investment portfolio is required
- You must have a brokerage account, either a taxable or individual retirement account, to hold your Fidelity CD’s
- Minimum per CD
- Fidelity’s new-issue CD’s start at $1,000 and are typically issued in increments of $1,000
- Unlike regular bank CD’s, which may hold various amounts of money, Fidelity breaks its CD’s up into smaller, typically standardized amounts
- Rates Depend on Bank
- Banks where the CD’s originate can choose to have higher or lower rates for their Fidelity CD’s than what they offer directly to their own customers
Fidelity offers 3 types of CD’s:
- Regular CDs:
- You receive interest until the term ends, or you can decide to sell before then
- Callable CDs:
- Have a slightly better rate than regular CDs
- The bank issuing them can “call” or cancel the CD before the term ends
- You receive interest only for the time you had the CD
- Step-up CDs:
- These CDs have a predetermined schedule for rate increases and are usually callable, so you might not see the rate increase before the CD gets called
Pros and Cons of Fidelity CD’s
Fidelity CD Pros:
- Fidelity can federally insure beyond a bank’s limits.
- Federal deposit insurance at a bank can cover only up to $250,000 per account type per customer.
- Fidelity lets you buy CDs from many banks, you can expand your protection against the possibility of a bank failing.
- Range of terms is wider than you can find at most banks.
- Fidelity offers flexibility for short- and long-term CDs and CD ladders, with rare 10- and 20-year terms.
Fidelity CD Cons:
- Top rates available today may fluctuate.
- Since the CDs are not Fidelity’s own, it doesn’t control what rates show up in its marketplace.
- There’s no guarantee you’ll find the same top rates in the morning and evening on the same day.
- Once you buy a CD, you lock in that rate.
- Some investing knowledge required.
- A new investor might come across unfamiliar terms on Fidelity’s platform.
Conclusion
Fidelity offers new-issue CDs from various banks as well as CDs sold by other investors on a secondary market.
Hopefully after reading this you understand how a Fidelity CD account works and how there rates compare.
Additionally, If you are interested be sure to check out our list of bank bonuses and CD rates!
