Fidelity CD Rates for January 2024

Fidelity CDs offer attractive APYs and a wide range of term lengths, from three months to ten years. Fidelity CDs, like other brokerages, are brokered CDs, which means they are only available to investors who have a Fidelity brokerage account. If you have a Fidelity broker and want to earn high interest on a fixed-income investment, keep reading to find out what makes Fidelity CDs unique.

Fidelity sells brokered CDs, which operate in the same way as conventional CDs but differ in how they are opened, closed, and insured. Customers can select from nine terms for new CDs and six terms for fractional CDs, or they can buy CDs sold by other investors on Fidelity’s secondary market. A minimum deposit of $100 or $1,000 is required for new CDs.

Fidelity Certificates of Deposit compete with the best institutions. The rates for new issue CDs are mentioned below. Rates, periods, and minimum deposit requirements for secondary CDs vary depending on availability and market conditions. The annual percentage yields (APYs) and account information are correct as of January 2, 2024.

New Issue CDs

Fractional CDs

About Fidelity

Fidelity Investments is a brokerage firm that provides a range of products and services, including investment accounts and advisory services. Fidelity serves over 43 million investors and manages around $11.5 trillion in assets. Over 200 Investor Centers are located throughout the United States.

Review of the Fidelity CD

Fidelity has brokered CDs, which means it does not issue the CDs but instead buys them in bulk from a bank and resells them to its clients. Fidelity can develop CD products with high APYs and multiple terms through this method, which you may not discover from the bank itself. To purchase these brokered CDs, you must first open a Fidelity account. Check out some of the benefits and drawbacks of these CDs below.

The Fractional CD from Fidelity varies from its conventional new-issue CDs in that it has lower minimums—each CD starts at $100. However, interest rates differ slightly, and term options are more limited.

A fractional CD has no purchase charge; if you decide to sell, the same trading fee and other risks apply as with new-issue CDs.

PROS

• Super competitive CD rates
• Wide range of term lengths
• Ready-made CD ladders
• Option to sell on a secondary market
• Potential to expand FDIC coverage
• Fractional CDs ($100 minimum)

CONS

• Simple interest
• Not easy to liquidate
• Minimum deposit of $100 or $1,000
• Fidelity account required

Unlike bank CDs, which allow you to deposit fractional figures such as $5,454, Fidelity CDs come in $1,000 or $100 increments. If you had $5,454, you could buy five $1,000 CDs and four $100 CDs and end up with $54. This isn’t unusual for a brokered CD, but Fidelity’s selection of $100 CDs (dubbed “Fractional CDs”) is unique to the broker and could help you spread out your funds more evenly.

Fidelity makes it simple to create CD ladders with its “Model CD Ladder” tool. A 1-year, 2-year, or 5-year ladder approach can be arranged through the broker. Fidelity will even reinvest maturing CDs for you, eliminating the need for you to do it yourself.

There is no early withdrawal option or penalty with Fidelity CDs. Instead, you can sell the CD on the secondary market to another depositor (subject to a $1 trading charge per CD). Better, Fidelity may assist you in finding a buyer or may even purchase the CD from you. However, selling a CD on the secondary market may result in a loss (or profit). This could be the situation if your CD offers a lower (or higher) APY than current CD rates.

Finally, it’s worth noting that Fidelity CDs increase through simple interest. That is, Fidelity’s CD rates only apply to your capital, not any interest received. This differs from bank CDs, which increase through compound interest (your interest will earn interest). However, Fidelity will deposit money in your Fidelity account when you earn it (monthly, quarterly, semi-annually, or yearly) on most long-term CDs (terms larger than 12 months). This allows you to reinvest your money and continue earning interest.

Other Fidelity CD accounts

Because Fidelity offers many CDs from various suppliers, it can provide you with access to a wide range of CD accounts, including the following:

• Zero-coupon CDs

• Callable CDs

• Step-up CDs

1. Zero-coupon CDs:

These CDs do not earn interest (also known as a “coupon,” hence the name “zero-coupon”), but can be acquired at a price lower than the CD’s face value. This could result in substantial revenues, but you must wait until the CD matures to see any profits. For example, you could pay $4,000 for a $5,000 CD with a 5-year term.

2. Callable CDs:

This form of CD has somewhat higher APYs but can be “called” at any time; that is, the issuer can force the CD into sudden maturity, which is typically inconvenient. For example, you could lock in a great long-term rate on a 5-year CD, but if the term is callable, the issuer could terminate it after three months.

3. Step-up CDs:

A step-up CD steadily raises its interest rate over its term. It usually follows a defined timetable, so you know when to expect an increase. The final “step” on the timetable may appear to be substantially higher than ongoing CD rates, but be cautious: the blended APY (that is, the sum of all the APYs) may be significantly less than purchasing a regular CD with a single set rate.

What Are Fidelity’s CD Rates Right Now?

How Do Fidelity CDs Work?

Fidelity distributes brokered CDs, which are a form of investment product, rather than its regular CDs. Banks sell these CDs to brokerage firms like Fidelity, which resell them to customers wishing to invest in specified amounts.

If you want to buy a CD through Fidelity, you can choose between a new issue and a used CD. New-issue CDs are sold at face value, often in $1,000 increments, however, secondary CDs are sold on the secondary market and may be priced above or below that amount depending on market conditions.

You can buy additional CDs if you want to invest more than $1,000. If you want to invest less, the bank also offers fractional CDs starting at $100.

Rates and terms for new-issue CDs are comparable to standard CDs at other banking institutions. You can select a term ranging from three months to five years, with variable interest rates. The bank that issued the CD determines your interest payment periods, which could be monthly, quarterly, or at maturity. You should also keep in mind that if you buy a lot of CDs, you may have many issuing banks with different periods.

Interest on Fidelity-brokered CDs is simple interest rather than compound interest, which means you only earn interest on the initial investment and not on any additional interest accumulated. This means you’ll know exactly how much you’ll earn during the life of your CD if you don’t resell it on the secondary market.

If you decide to resell your CD, Fidelity will charge you a $1 trade fee. You could earn more or less than the account’s par value depending on market conditions.

How Much Can You Earn With Fidelity’s CD Rates?

The interest rate on your Fidelity CD is determined by numerous factors, including the term duration and the amount you deposit. Brokered CDs do not automatically accrue compound interest because interest profits are transferred straight to your brokerage account, thus you must manually transfer earnings to another certificate if you want them to compound.

How Fidelity CDs Compare

When compared to the finest CD rates currently available, Fidelity’s CD rates are competitive and significantly higher than the national average CD rates. Still, you might be able to get a better APY on the term you require from another institution. Before making a decision, thoroughly research your options.

Fidelity CDs, like brokered CDs, provide extra features that may make them the better choice for you, such as the possibility to sell them early. Fidelity may also be a good choice for people wishing to browse secondary CDs and deposit as little as $100. However, opening a brokered CD is more complicated than opening a bank CD because you’ll require a brokerage account.

Fidelity CDs vs. Competitors

How To Open a Fidelity CD Account

If you want to open a CD with Fidelity, you must first open a brokerage account with the company. The money available in this account will be utilized to purchase CDs.

On Fidelity’s website, you can quickly compare term length, interest rates, and payment schedules for all available new issue CDs by issuing banks. You can complete your entire purchase online after picking the option that works best for you, including the amount you wish to invest and whether you want Fidelity to automatically reinvest your balance upon maturity.

Fidelity also allows you to build CD ladders if you want to buy many CDs with different term lengths to diversify your investment. You can select from model ladders ranging from one to five years in length, combining four to five CDs, or you can design your ladder by purchasing various CD goods.

Are Fidelity CDs FDIC-insured?

Fidelity CDs are FDIC guaranteed up to a maximum of $250,000 per account owner and per institution. Because Fidelity offers brokered CDs issued by a variety of insured institutions, each Fidelity CD may be eligible for additional insurance coverage beyond what a single CD with a single bank might provide.

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