What a Fidelity Certificate of Deposit Is

A Fidelity Certificate of Deposit (CD) is a savings product where you deposit money with Fidelity for a set period — typically three months to five years — and receive a fixed interest rate in return. You agree not to withdraw the money until the term ends. In exchange, Fidelity pays you more interest than you would earn in a regular savings account.

CDs are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per bank. This means if Fidelity fails, your money is protected up to that limit. The trade-off is simple: you lock your money away for a specific time, and Fidelity pays you a may provide rate for doing so.

Fidelity offers CDs through its banking partners, not directly as a bank itself. When you open a CD through Fidelity, your money sits with one of these partner banks, and the FDIC insurance applies to that account at that institution.

Key Takeaways

  • Fidelity CDs lock your money for a set term (three months to five years) in exchange for a fixed interest rate that does not change.
  • You can open a Fidelity CD through your Fidelity brokerage account, and the money is FDIC-insured up to $250,000 at the partner bank.
  • Early withdrawal before the term ends usually costs you a penalty, typically a few months of interest, though the exact amount depends on the CD term and current rates.
  • Interest rates on Fidelity CDs vary by term length and change daily based on market conditions; longer terms usually pay more than shorter ones.
  • You can set up a CD ladder by opening multiple CDs with different maturity dates so money becomes available at regular intervals without penalty.

How Interest Rates and Terms Work

Fidelity CDs come in standard terms: three months, six months, one year, two years, three years, and five years. The interest rate you receive depends on which term you choose and the current market environment. Longer terms almost always pay higher rates than shorter ones, because you are committing your money for a longer period.

The rate you lock in is fixed for the entire term. If market rates rise after you open the CD, your rate stays the same. If rates fall, you still earn what you agreed to. Fidelity publishes current CD rates on its website, and rates change daily. You see the exact rate before you commit money.

Interest compounds daily and is credited to your account at maturity — the end of the CD term. Some CDs allow you to receive interest payments during the term instead, but most Fidelity CDs pay everything at the end. Check the specific CD details when you are deciding.

Opening a Fidelity CD Through Your Account

You must have a Fidelity brokerage account to open a CD. If you already have one, you can add a CD from the Fidelity website or mobile app. Log in, navigate to the CDs section, and select the term and amount you want. Fidelity will show you the current rate for that term before you confirm.

The money comes from your existing Fidelity cash account or from a linked external bank account. You can transfer funds in immediately or use money already sitting in your Fidelity account. The CD opens the same day or the next business day, depending on when you complete the transaction.

You do not need to visit a branch or speak to anyone. The entire process happens online. Fidelity sends you a confirmation with the CD details: the amount, the term, the rate, and the maturity date.

What Happens When Your CD Matures

On the maturity date, your CD term ends. Fidelity automatically credits the principal plus all accrued interest to your Fidelity cash account. You can then withdraw the money, reinvest it in a new CD, or leave it in your cash account earning whatever rate that account currently pays.

Fidelity typically gives you a grace period — usually seven to ten days — during which you can choose what to do with the money. If you do nothing during that window, Fidelity will automatically renew the CD at the current rate for the same term. Read the maturity notice carefully so you know your options and the deadline.

If you want to move the money somewhere else, you can transfer it out of Fidelity to another bank or investment account. There is no penalty for doing this once the CD has matured.

Early Withdrawal Penalties and Exceptions

If you withdraw money before the maturity date, Fidelity charges an early withdrawal penalty. The penalty is usually expressed as a number of months of interest. For example, a one-year CD might have a three-month interest penalty, meaning you lose three months' worth of the interest you would have earned. The exact penalty depends on the CD term and the current rate environment.

The penalty is deducted from your interest earnings first. If you have not earned enough interest to cover the full penalty, the remainder comes from your principal. This means you could receive less money back than you originally deposited, though this is rare with shorter-term CDs.

Some life events — death of the account holder, or a court order — may allow penalty-free withdrawal. Contact Fidelity directly if you face an emergency and want to know whether an exception applies to your situation.

CD Ladders and Managing Multiple CDs

A CD ladder is a strategy where you open several CDs with different maturity dates. For example, you might open five one-year CDs, each maturing in consecutive years. Each year, one CD matures and you can withdraw the money or reinvest it without penalty. This gives you regular access to portions of your money while still earning CD rates on the rest.

Ladders work well if you want to balance safety and liquidity. You earn more than you would in a savings account, but you are not locking all your money away for years. Fidelity's website and app make it easy to track multiple CDs and see which ones are maturing soon.

You can also use a ladder to take advantage of rate changes. If rates rise, you can reinvest maturing CDs at the new higher rates. If rates fall, you still have older CDs earning the higher rates they locked in.

Comparing Fidelity CDs to Other Options

Fidelity CDs compete with CDs from banks, credit unions, and other brokerages. The rates are usually similar across institutions for the same term, though they can vary by a few basis points (hundredths of a percent). Shop around by checking rates at your current bank, a credit union, and other brokerages before deciding.

CDs pay more than regular savings accounts but less than stocks or bonds over long periods. They are safer than stocks because the rate is may provide and the money is FDIC-insured. They are less flexible than savings accounts because you cannot access the money without a penalty. Choose a CD if you have money you will not need for several months or years and want a may provide return.

If you already have a Fidelity brokerage account, opening a CD there is convenient because everything is in one place. If you do not have a Fidelity account, you would need to open one first, which takes a few minutes online.

Frequently Asked Questions

Can I withdraw money from a Fidelity CD before it matures?

Yes, but you will pay an early withdrawal penalty, usually equal to a few months of interest. The exact penalty depends on the CD term. For example, a five-year CD might have a one-year interest penalty. The penalty is deducted from your interest first, and any remainder comes from your principal.

What happens if Fidelity goes out of business?

Your CD is held at a partner bank, not at Fidelity itself, and is FDIC-insured up to $250,000. If the partner bank fails, the FDIC protects your money. If Fidelity as a brokerage fails, your CD is unaffected because it is not held there.

Can I open a Fidelity CD without a brokerage account?

No. You must have a Fidelity brokerage account to open a CD through Fidelity. Opening an account is free and takes a few minutes online. You can open the account and the CD on the same day.

How often do Fidelity CD rates change?

Fidelity updates CD rates daily based on market conditions. The rate you lock in when you open the CD does not change for the entire term. Rates you see tomorrow may be higher or lower than today's rates, but your rate stays the same once you commit.

Is a CD better than keeping money in a savings account?

CDs typically pay higher interest rates than savings accounts, but your money is locked away. If you need access to the money within a few months, a savings account is more flexible. If you will not need the money for a year or more, a CD usually pays more.