Fidelity CD rates: Top picks for 2024

If you have a lump-sum amount ready to be invested but you don’t want the big risk of the stock market, you can move that money into a certificate of deposit account, or CD. Fidelity offers a unique option, brokerage CDs, which could fit into your overall financial strategy. Here’s what to know.

What are CD investments?

A CD is a type of savings account where your money earns a higher yield than a traditional savings account. You’re required to leave it untouched until the terms are up — otherwise, you face a penalty. For folks who want their money to grow but don’t want to take too many risks with the stock market, a CD might be a good option.

“CDs are ideal for conservative investors who prioritize preserving principal over high returns,” said Andrew Lokenauth, founder of TheFinanceNewsletter.com. “You deposit money for a set period of time, usually ranging from three months to five years. In exchange, the bank pays you interest on your deposit.”

Why choose Fidelity for your CD investments?

Fidelity offers a different type of CD from other financial institutions. It has brokered CDs, which are similar to traditional CDs in that they’re issued by banks. But they’re for brokerage customers.

There are two types of CDs offered by Fidelity, new-issue CDs and fractional CDs. Fractional CDs have lower minimum deposits.

Fidelity CDs aren’t held to the same standard as traditional CDs, since they don’t have to be held to your original terms and can be sold on the secondary market. Brokered CD rates also can fluctuate daily.

Fidelity CD rates and terms

New-issue CD rates

Fractional CDs

How to open a Fidelity CD account

1. Open a Fidelity brokerage account. This type of account allows you to purchase assets and invest your money. The new-issue CDs and fractional CDs are some of the assets you can buy.
2. Search CDs. Fidelity’s website has an option to search CDs. You can only do this when you log into your Fidelity account. Filter the types of CDs you’re looking for and find one that works for you.
3. Make a deposit. Once you’ve found the CD you want, select it and then set the amount you want to invest. There’s also an open to get more than one CD at a time and build a CD ladder if you’d like.

Pros and cons of investing in Fidelity CDs

Fidelity CDs are different from those offered by a traditional bank or credit union. Weigh the pros and cons before opening a CD account at Fidelity.

Pros

• Fractional CDs available
• Can sell CDs early on the secondary market
• Many different types of CDs and accounts to choose from
• FDIC-insured
• Wide range of terms

Cons

• Fluctuating interest rates
• No automatic renewal (but you can select auto-enroll when you register)

Fidelity CD rates vs. other banks

While Fidelity’s CD rates are competitive with other banks, how you earn your money isn’t exactly the same.

That’s because Fidelity has brokered CDs, which don’t compound interest like traditional CDs found elsewhere. The interest you earn goes directly into your brokerage account.

While these are brokered investments, they are still CDs, which means you can expect lower yields compared to other, more high-risk investments.

“Compare interest rates, terms and minimum deposit requirements,” Lokenauth said. “Look for CD specials and promotional offers, [and] consider fees like early withdrawal penalties.”

CD ladder strategies

Because CDs tend to keep your money held up for a set amount of time untouched, some folks might be turned off at the idea that they can’t get their money without getting penalized. But you can build a CD ladder to get some of that money back sooner.

A CD ladder is a strategy that lets you open multiple CD accounts for different term lengths. For instance, if you want a 1-year CD ladder, you can open up four different short-term CDs:

• 3-month
• 6-month
• 9-month
• 1-year

If you want a 5-year CD, you can try:

• 1-year
• 2-year
• 3-year
• 4-year
• 5-year

Right now, short-term CDs are earning higher interest than long-term CDs. But rates can change based on market conditions. Taking a lump-sum amount and breaking it up evenly over a few different CDs can help you build up your yield both in the short term and long term rather than put your money in a high-yield savings account.