Fidelity CD Rates for 2024

Fidelity CDs have competitive APYs and a full suite of term lengths, ranging from three months to 10 years. Like other brokerages, Fidelity CDs are brokered CDs, meaning they're only available to investors with a Fidelity brokerage account. If your broker is Fidelity and you want to earn high interest on a fixed-income investment, read on to learn what makes Fidelity CDs so different.

Fidelity CD rates for 2024

Fidelity has brokered CDs, which means Fidelity doesn't issue the CDs itself but purchases them from a bank in bulk and resells them to its clients. Through this process, Fidelity can create CD products with high APYs and multiple terms, both of which you may not find at the bank itself. Like other brokered CDs, you have to open a Fidelity account to purchase them. Check out a few of the pros and cons of these CDs below.

Unlike bank CDs, which let you deposit fractional numbers -- like $5,454 -- Fidelity CDs come in increments of $1,000 or $100. If you have $5,454 to invest, then, you could buy five $1,000 CDs and four $100 CDs and be left with $54. This isn't unusual for a brokered CD, but Fidelity's choice of $100 CDs (which it calls "Fractional CDs") is unique to the broker and could help you spread out more of your savings.

With its "Model CD Ladder" tool, Fidelity makes it simple to build CD ladders. Through the broker, you can arrange a 1-year, 2-year, or 5-year ladder strategy. Fidelity will even reinvest maturing CDs for you, so you don't have to worry about doing it yourself.

Fidelity CDs don't have an early withdrawal option nor a penalty. Instead, you can sell the CD to another depositor on the secondary market (subject to $1 trading fee per CD). Better yet, Fidelity may help you find a buyer, or may even buy the CD from you. That said, selling a CD on the secondary market could result in a loss (or gain). This might be the case if your CD has a lower APY (or higher) than current CD rates.

Finally, it's important to note that Fidelity CDs grow by simple interest. That means, Fidelity's CD rates only apply toward your principal, not any interest you've earned. This is different from bank CDs, which grow by compound interest (in other words, your interest will earn interest). That said, for most long-term CDs (CDs with terms greater than 12 months), Fidelity will deposit interest in your Fidelity account as you earn it (monthly, quarterly, semi-annually, annually). This would allow you to reinvest your money to keep earning interest.

Who is a Fidelity CD right for?

A Fidelity CD may be appealing to fixed-income investors who want a high APY and don't mind locking their money up for a specific term.

Other Fidelity CD accounts

Since Fidelity offers multiple CDs from different providers, it can give you access to numerous different types of CD accounts, such as the following:

• Zero-coupon CDs: These CDs don't earn an interest rate (also called a "coupon," hence "zero-coupon") but rather can be purchased at a price below the CD's face value. This could result in significant earnings, but you have to wait until the CD matures to see any gains. For instance, you could buy a $5,000 CD with a 5-year term for $4,000.
• Callable CDs: This type of CD comes with slightly higher APYs but can be "called" at any moment; in other words, forced, often inconveniently, into sudden maturity by the issuer. For example, you may lock into a sweet long-term rate on a 5-year CD, but if it's callable, the issuer could cancel the term after three months.
• Step-up CDs: A step-up CD gradually increases its interest rate over its term. It typically follows a preset schedule, so you know when the increase is coming. The final "step" on the schedule may seem significantly higher than ongoing CD rates, but be careful: the blended APY (that is, the sum of all the APYs) could be significantly less than buying a traditional CD with one fixed rate.

Our CDs methodology

At The Motley Fool Ascent, certificates of deposit (CDs) are rated on a scale of one to five stars, primarily focusing on annual percentage yield (APY) and early withdrawal penalty fees. Our highest-rated CDs generally include competitive APYs without complex qualification tiers, low withdrawal fees, reliable brand trust and reputation, and ease of use.

Learn more about how The Motley Fool Ascent rates bank accounts.