Fidelity does not offer a standalone high yield savings account

Fidelity is a brokerage and investment firm, not a bank. They do not issue savings accounts with interest rates the way banks do. If you have a Fidelity brokerage account, you can hold cash in a settlement account, but that cash earns little to no interest — the rate varies and is typically much lower than what you would get from a dedicated savings account elsewhere.

Fidelity does offer money market funds and sweep options that hold your uninvested cash, but these are not the same as a high yield savings account. Money market funds carry different risks and fee structures than bank savings products, and their yields fluctuate with market conditions rather than being fixed rates.

If you are looking for a high yield savings account, you will need to open one at a bank or credit union, not through Fidelity. You can still use Fidelity for investing while keeping your savings elsewhere.

Key Takeaways

  • Fidelity is a brokerage, not a bank, so they do not offer savings accounts with interest rates.
  • Cash held in a Fidelity brokerage account earns minimal or no interest in the settlement account.
  • Money market funds at Fidelity are an alternative to cash, but they are not savings accounts and carry different risks.
  • For high yield savings, you need to open an account at a bank or credit union separate from your Fidelity investments.

What happens to cash sitting in your Fidelity account

When you deposit money into a Fidelity brokerage account and do not invest it, that cash goes into a settlement account. Fidelity sweeps uninvested cash into a money market fund or a partner bank account depending on your account type and settings. The interest rate on this cash is set by Fidelity and changes over time — it is not a rate you negotiate or lock in.

As of recent years, Fidelity's cash sweep rates have been very low, often under 0.01% APY. This means if you have $10,000 sitting in your Fidelity account, you might earn less than $1 per year. By contrast, a high yield savings account at a bank can offer 4% to 5% APY or higher, which would earn $400 to $500 per year on the same amount.

If you keep a large emergency fund or savings in a Fidelity account, you are giving up significant interest income. The settlement account is meant to hold money temporarily while you decide what to invest in, not as a place to park savings long-term.

Money market funds as an alternative to savings

Fidelity offers money market funds that some investors use instead of savings accounts. These funds invest in short-term, low-risk debt instruments like Treasury bills and commercial paper. The yield on a money market fund changes daily based on what those underlying investments earn.

Money market funds are not the same as savings accounts. They are not FDIC insured, though they are very stable. They may have transaction limits or fees depending on the fund. The yield is not may provide and can drop if interest rates fall. You also cannot write checks directly from most money market funds the way you can from a savings account.

If you want the simplicity and safety of a savings account with a may provide rate, a money market fund is not the right tool. If you want to keep some cash invested in something slightly more stable than a money market account, a money market fund might work as part of a broader strategy.

Where to open a high yield savings account instead

High yield savings accounts are offered by online banks, traditional banks, and credit unions. Online banks like Marcus, Ally, and Wealthfront typically offer the highest rates because they have lower overhead costs. Traditional banks like Chase and Bank of America offer lower rates but may have more branch locations. Credit unions often offer competitive rates to their members.

You can open a high yield savings account in minutes online. You will need to provide your name, address, Social Security number, and initial deposit method. Most accounts are FDIC insured up to $250,000, which means your money is protected if the bank fails.

You can have both a Fidelity brokerage account and a high yield savings account at the same time. Many investors keep their emergency fund or short-term savings in a high yield account and use Fidelity for longer-term investing. This way, your savings earns a real rate of interest while your investments grow.

How to move money between Fidelity and a savings account

If you decide to open a high yield savings account and move cash out of Fidelity, the process is straightforward. You can link your savings account to your Fidelity account and transfer money between them. Fidelity calls this an external bank transfer or ACH transfer.

To set up the link, you will need your savings account number and routing number. Fidelity will verify the account by depositing two small amounts (usually under $1 each) and asking you to confirm the amounts. Once verified, you can transfer money in either direction. Transfers typically take one to three business days.

You can also withdraw cash from Fidelity by check or debit card if your account type allows it, though this is slower than an electronic transfer. If you are moving a large amount, electronic transfer is faster and more reliable.

Why Fidelity focuses on investing, not savings

Fidelity's business model is built around investment management and trading, not deposit-taking. They make money when you invest, trade, or use their advisory services. A high yield savings account would require Fidelity to become a bank, which means regulatory oversight, deposit insurance costs, and a different business structure.

Some large brokerages like Charles Schwab have obtained bank charters and now offer high yield savings accounts to their customers. Fidelity has not taken this step, so they remain a brokerage without banking services. This does not make Fidelity a bad choice for investing — it just means you need to use a separate institution for savings.

Frequently Asked Questions

Can I earn interest on cash in my Fidelity account?

Yes, but the rate is very low — typically under 0.01% APY. Your cash is swept into a money market fund or partner bank account, but the interest earned is minimal compared to a high yield savings account at a bank.

Is money in a Fidelity settlement account insured?

It depends on where Fidelity sweeps your cash. If it goes into a partner bank account, it may be FDIC insured up to $250,000. If it goes into a money market fund, it is not FDIC insured, though money market funds are very stable. Check your Fidelity account settings to see where your cash is held.

Can I use Fidelity for investing and a separate bank for savings?

Yes, this is a common setup. You can keep your emergency fund and short-term savings in a high yield account at a bank and use Fidelity for stocks, bonds, and other investments. You can transfer money between them as needed.

What is the difference between a money market fund and a savings account?

A savings account is FDIC insured and has a fixed or variable interest rate set by the bank. A money market fund is not insured and its yield changes daily based on market conditions. Savings accounts are simpler and safer for emergency funds; money market funds are better for investors who want slightly higher returns and can tolerate some volatility.

Does Fidelity plan to offer savings accounts in the future?

Fidelity has not announced plans to offer savings accounts. They remain focused on brokerage and investment services. If this changes, it would require Fidelity to obtain a bank charter, which is a major regulatory step.