Fidelity does not offer a standalone high yield savings account
Fidelity Investments does not have a dedicated high yield savings product. If you hold a brokerage account with Fidelity, you can keep cash in a money market fund or a sweep account that earns interest, but these are not the same as a high yield savings account at a bank. The rates, protections, and how your money moves differ significantly from what you would get at an online bank or credit union.
Fidelity's cash management options are designed for people who already invest with them and want somewhere to park money between trades or hold a portion of their portfolio in cash. If your main goal is to save money and earn the highest possible rate, a dedicated high yield savings account elsewhere may serve you better.
Key Takeaways
- Fidelity offers money market funds and sweep accounts for cash, not a high yield savings account, and rates are typically lower than online banks.
- Money market funds at Fidelity are mutual funds, not bank deposits, so they lack FDIC insurance and carry a small amount of market risk.
- Fidelity's sweep accounts move uninvested cash into money market funds or partner bank accounts automatically, depending on which option you choose.
- If you want FDIC-insured savings with the highest rates, you will need to open a separate account at an online bank or credit union.
How Fidelity's cash options work
When you open a brokerage account with Fidelity, any cash you deposit sits in a default sweep account. This means uninvested money automatically moves into a money market fund or a bank deposit product, depending on which sweep option you select. Fidelity offers several sweep choices, and the rate you earn depends on which one you pick.
The most common sweep options are Fidelity Government Money Market Fund, Fidelity Treasury Money Market Fund, and a sweep into partner bank accounts. Each has a different yield and different holdings. Government and Treasury money market funds hold short-term government securities and are not FDIC insured. The bank sweep option places your cash with partner banks and is FDIC insured up to the standard limit per bank.
You can change your sweep selection in your account settings, but the default is usually a money market fund. If you want FDIC protection, you must actively choose the bank sweep option.
Money market funds versus high yield savings accounts
A money market fund is a mutual fund that invests in very short-term debt. It is not a bank deposit. This distinction matters because money market funds are not FDIC insured, though they are considered very low risk. The fund's value can fluctuate slightly, though in practice this is rare. You also cannot write checks or use a debit card on a money market fund the way you can with a savings account.
A high yield savings account is a bank deposit product. Your money is FDIC insured up to $250,000 per bank, per account type. You can withdraw money instantly, and the rate does not change based on market conditions. Most online banks offer rates between 4% and 5% APY as of early 2024, though rates vary by institution and change over time.
Fidelity's money market fund rates are typically lower than what you would find at an online bank. The exact rate depends on the fund and current market conditions, but Fidelity's rates have historically trailed online savings accounts. If earning the highest rate is your priority, opening a separate high yield savings account will likely serve you better.
When Fidelity's cash options make sense
Fidelity's sweep accounts are most useful if you already invest with Fidelity and need a place to hold cash temporarily. If you are waiting to buy stocks or bonds, or you hold a portion of your portfolio in cash for stability, the sweep account keeps that money earning something rather than sitting idle at zero interest.
The bank sweep option at Fidelity can also be useful if you have more than $250,000 in cash. Fidelity's sweep partners include multiple banks, so your deposits may be spread across them and covered by FDIC insurance at each one. This gives you more FDIC protection than a single bank account would provide. However, you need to understand how the sweep works and confirm the coverage with Fidelity before relying on this.
If you do not have a Fidelity brokerage account and are looking purely for a place to save money and earn interest, you do not need Fidelity. You would be better served by opening a high yield savings account at an online bank, credit union, or traditional bank that offers competitive rates.
How to check Fidelity's current money market fund rates
Fidelity publishes the current yield on its money market funds on its website. You can search for the specific fund name (such as "Fidelity Government Money Market Fund") and view the current 7-day yield. This yield changes as interest rates and fund holdings change, so the rate you see today may not be the rate you earn next month.
If you have a Fidelity account, you can also log in and view the yield on your sweep account directly. The account summary page shows which sweep option you are using and what rate you are currently earning. If you want to change your sweep selection to a different money market fund or to the bank sweep option, you can do that in the account settings.
Opening a high yield savings account elsewhere
If you decide a high yield savings account is a better fit than Fidelity's options, you can open one at an online bank, credit union, or traditional bank. Online banks typically offer the highest rates because they have lower overhead costs. Credit unions may offer competitive rates to members. Traditional banks often offer lower rates but may have physical branches if you value in-person service.
You will need to provide your name, address, Social Security number, and proof of identity. The process usually takes 5 to 10 minutes online. Once your account is open, you can transfer money from your Fidelity account or any other bank account via ACH transfer, which typically takes 1 to 3 business days.
You can keep both a Fidelity brokerage account and a separate high yield savings account. Many people do this: they use Fidelity to invest and a high yield savings account to save. There is no rule against holding accounts at multiple institutions.
Frequently Asked Questions
Can I earn interest on cash in my Fidelity brokerage account?
Yes. Cash in your Fidelity account automatically sweeps into a money market fund or bank deposit product, depending on your sweep selection. You will earn interest, but the rate is typically lower than online high yield savings accounts. You can view your current rate in your account settings.
Is my money FDIC insured if I use Fidelity's money market fund?
No. Money market funds are mutual funds, not bank deposits, so they are not FDIC insured. However, they are considered very low risk. If FDIC insurance is important to you, select Fidelity's bank sweep option instead, which places your cash with partner banks that are FDIC insured.
What is the difference between Fidelity's Government Money Market Fund and Treasury Money Market Fund?
Both hold short-term government securities and are very low risk. The Government fund holds a mix of government debt, while the Treasury fund holds only U.S. Treasury securities. Rates and holdings differ slightly, so check the fund details on Fidelity's website to see which currently offers a better yield.
Can I withdraw money from Fidelity's money market fund anytime?
Yes, you can sell shares of the money market fund and move the proceeds to your bank account or use them to buy investments. The transaction typically settles within one business day. You cannot write checks directly on the money market fund the way you can with a savings account.
Should I move my savings from Fidelity to a high yield savings account?
If your goal is to earn the highest rate on savings and you do not plan to invest, a dedicated high yield savings account will likely pay more. If you already invest with Fidelity and want to keep cash there for convenience, Fidelity's sweep account works fine, though the rate will be lower than a dedicated savings account elsewhere.