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Certificates of Deposit (CDs)

Certificates of deposit, or CDs, are fixed income investments that generally pay a set rate of interest over a fixed time period.

Reasons to consider CDs

  • FDIC insurance
  • Flexibility
  • Liquidity

Fidelity offers investors brokered CDs, which are CDs issued by banks for the customers of brokerage firms. The CDs are usually issued in large denominations and the brokerage firm divides them into smaller denominations for resale to its customers. Because the deposits are obligations of the issuing bank, and not the brokerage firm, FDIC insurance applies.

Brokered CD vs. bank CD
A brokered CD is similar to a bank CD in many ways. Both pay a set interest rate that is generally higher than a regular savings account. Both are debt obligations of an issuing bank and both repay your principal with interest if they’re held to maturity. More important, both are FDIC-insured up to $250,000 (per account owner, per institution), a coverage limit that was made permanent in 2010.

Unlike a bank CD, a brokered CD can be traded on the secondary market,1 meaning it doesn’t necessarily have to be held to maturity.2 Brokered CDs can also be purchased from multiple banks and held in a single account at Fidelity, allowing you to effectively expand your FDIC protection beyond the $250,000 limit. Even if you own brokered CDs within multiple accounts, these holdings can be consolidated into a single account at one financial institution.3 When purchasing a brokered CD through Fidelity, you may also take advantage of our Auto Roll Program, which can help you maintain your income stream by reinvesting the CD’s maturing principal, or investing in multiple CDs of varying maturities in a laddering strategy.

Brokered CDs from Fidelity
Fidelity offers brokered CDs through two main venues—as new issue offerings and from the secondary market. Investors typically will see 50–100 new issue offerings and as many as 2,000 secondary offerings at any point in time. New issue offerings are typically sold at par and investors do not pay a trading fee to purchase them.4 Purchases (and sales) of secondary CDs incur a trading fee of $1 per CD (1 CD = $1,000 par value), subject to an $8 minimum for online purchases.5

Brokered CDs come in a wide range of maturities—as little as 3 months and as long as 20 years. This allows you to choose between high degrees of liquidity, meaning you have the opportunity to reinvest your funds frequently, and stability, meaning you can lock in favorable interest rates for long periods of time. Like other fixed income securities, CDs with longer terms or maturities generally have higher yields.

Brokered CDs offered by Fidelity are FDIC-insured up to $250,000 per account owner, per institution. However, there is a way to expand your coverage beyond this amount. While banks themselves do not have the ability to exceed FDIC-insurance limits, Fidelity offers many CDs from hundreds of different banks, each of which provides for FDIC protection up to current FDIC limits. By combining a number of these CDs in your Fidelity account, you’re able to expand your protection.3

Unlike bank CDs, there is generally a secondary market for brokered CDs sold prior to maturity.1 Furthermore, if a customer who owns a CD at Fidelity wishes to liquidate that position, he or she may do so at any time, subject to a $1 per CD (1 CD = $1,000 par value) trading fee.5 Most banks charge a penalty to liquidate one of their CDs. Note that while Fidelity attempts to support the secondary trading of the CDs it offers, the new issue market garners the most interest. Accordingly, investors attempting to sell CDs may experience limited liquidity in secondary markets.

Brokered CD offerings provide access to multiple banks’ CDs. In addition, because brokered CDs are securities, purchasing one requires none of the paperwork that is required when purchasing a bank CD. By consolidating a number of brokered CDs in a single brokerage account at a single financial institution, you’re reducing your paperwork, streamlining the purchase process, simplifying the process of managing multiple maturities, and potentially expanding your FDIC coverage under one account.

Lower yields
Because of the inherent safety and short-term nature of a CD investment, yields on CDs tend to be lower than other higher risk investments.

Interest rate fluctuation
Like all fixed income securities, CD valuations and secondary market prices are susceptible to fluctuations in interest rates. If interest rates rise, the market price of outstanding CDs will generally decline, creating a potential loss should you decide to sell them in the secondary market. Since changes in interest rates will have the most impact on CDs with longer maturities, shorter-term CDs are generally less impacted by interest rate movements.

Credit risk
Since CDs are debt instruments, there is credit risk associated with their purchase, although the insurance offered by the FDIC may help mitigate this risk. Customers are responsible for evaluating both the CDs and the creditworthiness of the underlying issuing institution.

Insolvency of the issuer
In the event the issuer approaches insolvency or becomes insolvent, the CD may be placed in regulatory conservatorship, with the FDIC typically appointed as the conservator. As with any deposits of a depository institution placed in conservatorship, the CDs of the issuer for which a conservator has been appointed may be paid off prior to maturity or transferred to another depository institution. If the CDs are transferred to another institution, the new institution may offer you a choice of retaining the CD at a lower interest rate or receiving payment.

Selling before maturity
CDs sold prior to maturity are subject to a concession and may be subject to a substantial gain or loss due to interest rate changes and other factors. In addition, the market value of a CD in the secondary market may be influenced by a number of factors including, but not necessarily limited to, interest rates, provisions such as call or step features, and the credit rating of the issuer. The secondary market for CDs may be limited. Fidelity currently makes a market in the CDs we make available, but may not do so in the future.

Coverage limits
FDIC insurance only covers the principal amount of the CD and any accrued interest. In some cases, CDs may be purchased on the secondary market at a price that reflects a premium to their principal value. This premium is ineligible for FDIC insurance. More generally, FDIC insurance limits apply to aggregate amounts on deposit, per account, at each covered institution. Investors should consider the extent to which other accounts, deposits or accrued interest may exceed applicable FDIC limits. For more information on the FDIC and its insurance coverage, visit www.fdic.gov.

Next steps

Find CDs. Choose from 40,000 new issue and secondary market bonds & CDs, and approximately 60,000 total offerings with our Depth of Book.

Learn about the Fidelity Auto Roll Program. Have your U.S. Treasury and CD investments automatically reinvested at maturity.

accrued interest

the interest received from a security's last coupon interest payment date up to the current date or date of valuation; when calculating accrued interest for a bond traded in the secondary market, the seller receives interest up to, but not including, the settlement date from the buyer


credit risk

the risk that the issuer of a fixed-income security may not be able to make regularly scheduled interest payments or repay the principal at maturity


debt obligation/principal

an interest-bearing promise, to pay a specified sum of money (the principal amount) on a specific date; bonds are a form of debt obligation; categories of bonds are: corporate, municipal, treasury, agency/GSE


interest rate

the annual rate, expressed as a percentage of principal, payable for use of borrowed money



the amount paid by a borrower to a creditor, or bondholder, as compensation for the use of borrowed money



a government, corporation, municipality, or agency that has issued a security (e.g., a bond) in order to raise capital or to repay other debt; the issuer goes to an underwriter to get their securities sold in the new issue market; for certificates of deposit (CDs), this is the bank that has issued the CD; in the case of fixed income securities, the issuer of the security is the primary determinant of the security's characteristics (e.g., coupon interest rate, maturity, call features, etc.)


maturity, maturity date(s)

the date on which the principal amount of a fixed income security is scheduled to become due and payable, typically along with any final coupon payment. It is also a list of the maturity dates on which individual bonds issued as part of a new issue municipal bond offering will mature



the percentage of return an investor receives based on the amount invested or on the current market value of holdings; it is expressed as an annual percentage rate; yield stated is the yield to worst — the yield if the worst possible bond repayment takes place, reflecting the lower of the yield to maturity or the yield to call based on the previous close


Fidelity Learning Center

Insights into brokered CDs at Fidelity
Listen to our fixed income professionals as they provide a behind-the-scenes look at our CD offerings in this recording of a Fidelity webinar.

Additional resources

Learn how to create a CD ladder (4:10) NEW
See how a CD ladder can help you earn more than other cash investments while still affording frequent access to your money.

Learn the basics of investing with CD barbells (3:54) NEW
See how a CD barbell can help you mix long-and short-term CDs to help earn higher returns while maintaining frequent access to your money.

1. The secondary market may be limited. The pre-maturity sale price of CDs may be less than its original purchase price, particularly if interest rates are higher at the time of sale. There may be certain features or provisions of the CD that may also influence its market price. If you want to buy or sell a CD, Fidelity Brokered Services LLC (“FBS”) may charge you a fee. This concession will be applied to your order, and you will be provided the opportunity to review it prior to submission for execution. CDs are made available through our affiliate National Financial Services LLC (“NFS”) and from various third-party providers, including participants on the BondDesk platform, with FBS normally acting as riskless principal or agent. These offering brokers, including NFS, may separately mark up or mark down the price of the security and may realize a trading profit or loss on the transaction.
2. Any fixed income security sold or redeemed prior to maturity may be subject to a substantial gain or loss. Your ability to sell a CD on the secondary market is subject to market conditions. If your CD has a step rate, the interest rate of your CD may be higher or lower than prevailing market rates. The initial rate on a step rate CD is not the yield to maturity. If your CD has a call provision, which many step rate CDs do, please be aware the decision to call the CD is at the issuer’s sole discretion. Also, if the issuer calls the CD, you may be confronted with a less favorable interest rate at which to reinvest your funds. Fidelity makes no judgment as to the creditworthiness of the issuing institution.
3. For the purposes of FDIC insurance coverage limits, all depository assets of the account holder at the institution that issued the CD will generally be counted toward the aggregate limit (usually $250,000) for each applicable category of account. FDIC insurance does not cover market losses. All of the new issue brokered CDs Fidelity offers are FDIC insured. In some cases, CDs may be purchased on the secondary market at a price that reflects a premium to their principal value. This premium is ineligible for FDIC insurance. For details on FDIC insurance limits, see www.fdic.gov.
4. Fidelity makes new issue CDs available without a separate transaction fee. Fidelity Brokerage Services LLC and National Financial Services LLC receive compensation for participating in the offering as a selling group member or underwriter.
5. Other concessions apply if traded with a Fidelity representative. See Fidelity.com/commissions for details.