Fidelity does not offer a traditional high-yield savings account, but it does offer cash management accounts that function similarly
Fidelity's main cash product is the Fidelity Government Money Market Fund (ticker: SPAXX), which holds U.S. Treasury securities and cash equivalents. This is not a savings account—it is a money market mutual fund—but it serves the same purpose: a place to park cash and earn interest. The current yield varies based on market conditions and Federal Reserve rates, not a fixed APY.
Fidelity also offers cash management services through its brokerage accounts. When you hold cash in a Fidelity brokerage account (rather than investing it), that cash is swept into interest-bearing vehicles. The rate you earn depends on which sweep option you choose and current market conditions. Fidelity does not publish a single "savings account APY" the way a bank does.
If you are looking for a straightforward high-yield savings account with a may provide APY, you will need to open an account at a bank or credit union, not through Fidelity. Fidelity is a brokerage and investment firm, not a bank.
Key Takeaways
- Fidelity's Government Money Market Fund (SPAXX) is the closest product to a savings account, but it is a mutual fund, not a bank deposit account.
- Cash held in a Fidelity brokerage account earns interest through automatic sweeps, but the rate fluctuates with market conditions and is not a fixed APY.
- Fidelity does not offer FDIC insurance on cash balances the way a bank savings account does.
- If you need a fixed APY and FDIC protection, you will need to open a savings account at a bank or credit union separate from Fidelity.
How Fidelity's cash sweep options work
When you deposit cash into a Fidelity brokerage account, the money does not sit idle. Fidelity automatically moves it into one of several sweep options, depending on which you select. The default is usually the Government Money Market Fund, but you can choose alternatives.
The sweep options include the Government Money Market Fund, the Fidelity Treasury Fund, and in some cases a sweep to a partner bank account. Each option has a different yield and different characteristics. The Government Money Market Fund holds short-term Treasury securities and cash, so its yield moves with Treasury rates. The Treasury Fund holds longer-term Treasury bonds, so it carries slightly more interest rate risk but may offer a higher yield in some rate environments.
You can change your sweep option at any time through your Fidelity account settings. There is no penalty for switching, but the new option takes effect on new deposits and may take a few business days to process for existing cash.
Why Fidelity's approach differs from a bank savings account
A bank savings account is a deposit product backed by FDIC insurance up to $250,000 per depositor. The bank pays you a fixed or variable APY and guarantees your principal. Fidelity's money market funds are not deposits—they are mutual funds. Your principal is not may provide, and there is no FDIC insurance.
In practice, money market funds are extremely stable. The Government Money Market Fund invests only in U.S. Treasury securities and cash, which carry virtually no credit risk. But the fund's value can fluctuate slightly, and the yield is not fixed. If you need absolute certainty about your rate and protection, a bank savings account is the right choice.
Fidelity's structure does have one advantage: there is no account minimum, no monthly fee, and no restrictions on how often you move money in and out. A bank savings account may limit transfers or charge fees if you exceed them.
Current rates at Fidelity versus banks
Fidelity does not publish a single APY for its money market funds the way a bank publishes a savings account rate. Instead, the yield is shown as a seven-day yield, which reflects the annualized return based on the fund's recent earnings. You can see this yield on Fidelity's website or in your account.
As of early 2024, high-yield savings accounts at online banks typically offered rates between 4.5% and 5.3% APY, depending on the bank and current market conditions. Fidelity's Government Money Market Fund yield has been competitive with these rates when the Federal Reserve rate is high, but the comparison changes as rates move. To compare current rates, check Fidelity's website for the seven-day yield on SPAXX and compare it to the APY listed on a bank's savings account page.
The key difference is that a bank's APY is fixed for the term you agree to, while Fidelity's yield changes daily. If rates are falling, you may earn less over time. If rates are rising, you may earn more.
How to use Fidelity for cash if you do not want to invest
If you have a Fidelity brokerage account but do not want to invest in stocks or bonds, you can straightforward deposit cash and let it sit in the money market fund. You earn interest without taking on investment risk. This works well if you are saving for a goal but want the flexibility to move money quickly if you need it.
To set this up, open a Fidelity brokerage account (if you do not have one), deposit cash, and confirm that your sweep option is set to the Government Money Market Fund or your preferred option. You can check your sweep setting in Account Settings under Cash Management or Sweep Options.
You can withdraw the cash at any time. Transfers to your bank account typically take one to three business days. There is no penalty for withdrawing early, unlike some bank products.
When to use Fidelity cash products versus a bank savings account
Use Fidelity's money market fund if you have a Fidelity brokerage account and want to earn interest on cash without opening another account elsewhere. It is convenient if you are already using Fidelity to invest and want a single login for everything.
Use a bank savings account if you want FDIC insurance, a fixed APY, or a product designed specifically for saving rather than investing. A bank savings account is simpler if you do not plan to invest and do not want to learn how mutual funds work.
Some people use both: a high-yield savings account at a bank for their emergency fund or short-term savings, and a Fidelity brokerage account with cash sweep for money they might invest later or for funds they want to access quickly without waiting for a bank transfer.
Frequently Asked Questions
Is my money in a Fidelity money market fund insured?
No. Money market funds are not FDIC insured. However, the Government Money Market Fund invests only in U.S. Treasury securities and cash, which carry no credit risk. The fund has never lost value, but there is no government may provide. A bank savings account offers FDIC insurance up to $250,000.
Can I set up automatic transfers from my bank to Fidelity?
Yes. You can link your bank account to Fidelity and set up recurring transfers. This works the same way as transferring to any other account. Transfers typically take one to three business days.
What happens to my cash if Fidelity goes out of business?
Fidelity is a large, established brokerage firm, but if it failed, your cash would be protected by the Securities Investor Protection Corporation (SIPC) up to $250,000 per account type. This is different from FDIC insurance but provides similar protection. Money market fund shares themselves are not at risk because they represent ownership of Treasury securities, not a claim on Fidelity.
Can I earn interest on cash in a Fidelity IRA or 401(k)?
Yes. If you hold cash in a Fidelity IRA or 401(k) instead of investing it, that cash is swept into interest-bearing vehicles the same way as in a taxable brokerage account. The rate depends on your sweep option. This is useful if you are between investments or waiting to deploy funds.
How do I compare Fidelity's rate to my bank's savings account rate?
Check the seven-day yield on Fidelity's Government Money Market Fund (SPAXX) on Fidelity's website, and compare it to the APY your bank lists for its savings account. Keep in mind that Fidelity's yield changes daily, while a bank's APY is usually fixed. Over time, the total interest you earn will depend on how rates move.