What Fidelity CDs offer and how rates are set

Fidelity offers certificates of deposit through its brokerage platform, and the rates you receive depend on which bank or credit union actually holds your CD. Fidelity itself does not set the rates — it connects you to partner institutions, and each one posts its own rate for each term length. The rate you see when you open an account is locked in for the full term, whether that's three months, one year, five years, or another duration.

CD rates move with the broader interest rate environment. When the Federal Reserve raises its benchmark rate, banks typically raise CD rates within weeks. When rates fall, CD rates fall too. This means a CD opened today will pay differently than one opened six months ago, and the rate you lock in now will not change even if rates rise after you purchase it.

Fidelity's role is to show you rates from multiple partner banks side by side, so you can compare terms and rates without opening accounts at each bank separately. You fund the CD through your Fidelity account, and the money sits with the partner bank until maturity.

Key Takeaways

  • Fidelity CDs are issued by partner banks and credit unions, not by Fidelity itself, so the rate depends on which institution you choose.
  • Your rate is fixed for the entire term — it will not change if interest rates move up or down after you open the account.
  • Terms range from three months to five years or longer, and shorter terms typically offer lower rates than longer ones.
  • Your CD is insured by the FDIC (if the issuer is a bank) or NCUA (if it is a credit union) up to $250,000 per account owner per institution.
  • Early withdrawal before maturity usually means forfeiting some or all of the interest you would have earned, depending on the CD's terms.

How to find current rates and compare terms

Log into your Fidelity account and navigate to the CD section, usually found under "Fixed Income" or "Bonds & CDs." Fidelity displays available CDs sorted by term length and rate. You can filter by how long you want to lock up your money — three months, six months, one year, two years, and so on — and the platform shows you the current rate for each option from different partner institutions.

The rate shown is what you will receive if you purchase that CD that day. Rates update throughout the trading day as partner banks adjust them. If you see a rate you like, you can purchase immediately through your Fidelity account. The money moves from your Fidelity cash balance to the partner bank, and your CD begins accruing interest.

Fidelity does not charge a fee to open or hold a CD. The partner bank may have minimum deposit requirements — often $1,000 or $2,500 — but Fidelity's platform makes this clear before you commit.

Understanding FDIC and NCUA insurance on your CD

When you open a CD through Fidelity with a bank partner, your deposit is covered by FDIC insurance up to $250,000 per account owner per bank. If you open a CD with a credit union partner, it is covered by NCUA insurance up to $250,000 per account owner per credit union. This means if the bank or credit union fails, you get your principal and accrued interest back, up to the limit.

The $250,000 limit applies per institution, not per CD. If you open two CDs with the same bank through Fidelity, the total coverage across both is $250,000. If you open CDs with two different banks, each has its own $250,000 coverage. Fidelity can help you understand which partner institutions your CDs are held with, so you can track your total exposure at each one.

This insurance does not cover losses from interest rate changes or opportunity cost — it only protects your money if the issuing institution fails.

What happens when your CD reaches maturity

On the maturity date, your CD stops earning interest. Fidelity typically gives you a grace period — usually five to ten calendar days — during which you can decide what to do next. You can let the CD renew automatically at the current rate the partner bank is offering, withdraw the money to your Fidelity cash account, or purchase a new CD with a different term or rate.

If you do nothing during the grace period, most CDs renew automatically. Check your account settings or contact Fidelity to confirm whether automatic renewal is turned on. If you want to avoid an automatic renewal you do not want, you must act before the grace period ends.

When a CD matures, you receive your original principal plus all interest earned. That interest is taxable income in the year it is earned, even if you do not withdraw it. Fidelity will send you a 1099-INT form for tax reporting if your interest exceeds $10.

Early withdrawal penalties and when they apply

If you withdraw money from a CD before its maturity date, the partner bank charges an early withdrawal penalty. The size of the penalty varies by bank and by CD term — a longer-term CD typically has a larger penalty than a shorter one. Some banks charge a flat fee; others charge a certain number of months' worth of interest. You should review the specific terms before you purchase, because the penalty can erase some or all of your earnings.

For example, a five-year CD might have a penalty equal to six months of interest. If you withdraw after one year, you forfeit six months of interest even though you earned more than that. A three-month CD might have a penalty of seven days' interest, which is much smaller.

Fidelity shows the penalty terms before you complete the purchase. If you think you might need the money before maturity, a shorter-term CD or a money market account may be a better fit than a long-term CD.

How CD rates compare to other savings options

CDs typically pay more than a regular savings account but less than you might earn from stocks or bonds over a long period. The trade-off is certainty: a CD rate is may provide, whereas stock returns fluctuate. A high-yield savings account offers no maturity date and lets you withdraw anytime without penalty, but usually pays less than a CD of the same term length.

Money market accounts sit between savings accounts and CDs — they often pay rates close to CDs but with more flexibility to withdraw, though sometimes with limits on how often you can withdraw per month. If you have money you will not need for several years, a CD locks in a rate that is usually higher than a savings account. If you might need the money sooner, a savings account or money market account is more practical.

Fidelity offers all three options, so you can compare rates across products on the same platform. The best choice depends on when you will need the money and how much certainty you want.

Tax treatment of CD interest

Interest you earn on a Fidelity CD is taxable as ordinary income in the year it is earned. You do not pay tax when you open the CD or when it matures — you pay tax on the interest itself. If your CD earns $500 in interest over the year, that $500 is added to your taxable income for that year, even if you leave the money in the CD and do not withdraw it.

Fidelity sends a 1099-INT form to you and the IRS if your interest income from all sources exceeds $10 in a calendar year. You report this on your tax return. If you hold multiple CDs or have interest from other accounts, the total across all of them determines whether you receive a 1099-INT.

Some people use CDs in retirement accounts like IRAs to defer taxes on the interest, since interest earned inside an IRA is not taxed until you withdraw from the account. Fidelity offers CDs within IRA accounts as well as in regular taxable accounts.

Frequently Asked Questions

Can I buy a Fidelity CD if I do not have a Fidelity brokerage account?

No. You must have a Fidelity brokerage account to purchase CDs through their platform. You can open one online in a few minutes. Once your account is funded, you can browse and purchase CDs from partner institutions.

What if interest rates rise after I buy my CD?

Your rate stays the same for the full term. You are locked in at the rate you purchased. If rates rise, new CDs will pay more, but yours will not change. This is the trade-off of a CD — you get certainty, but you also miss out if rates move in your favor.

Can I sell my CD before it matures?

Some CDs can be sold on the secondary market through Fidelity before maturity, but most cannot. Check the specific CD's terms. If you can sell, the price depends on how rates have moved since you bought it — if rates have risen, your CD is worth less. Early withdrawal through the bank is usually simpler and results in an interest penalty rather than a market loss.

Do I need to do anything when my CD matures?

If you do nothing, most CDs renew automatically at the current rate. If you want to withdraw the money or move it elsewhere, you must act during the grace period, usually five to ten days after maturity. Check your account settings to see whether automatic renewal is on.

What is the minimum amount I need to open a Fidelity CD?

Fidelity itself has no minimum, but each partner bank sets its own. Most require $1,000 to $2,500 to open a CD. Fidelity shows the minimum for each CD before you purchase, so you know what is required.