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Certificates of Deposit

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

Find CDs and rates

New issues

Secondary market

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

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.
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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

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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

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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

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interest rate

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

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interest

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

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issuer

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.)

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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

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yield

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

Questions?

Fidelity Learning Center

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.
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