Fidelity does not offer a traditional high yield savings account

Fidelity is primarily a brokerage and investment company, 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 it, but that cash earns little to no interest — Fidelity's cash management rates are typically much lower than what you would find at a dedicated savings bank.

However, Fidelity does offer a product called the Fidelity Government Money Market Fund, which is designed to hold cash safely and can pay a modest yield. This is not the same as a savings account. It is a money market fund — a type of mutual fund that invests in very short-term, very safe government debt. The yield changes with market conditions and is not may provide.

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. Many online banks offer rates significantly higher than Fidelity's cash options.

Key Takeaways

  • Fidelity is a brokerage firm, not a bank, so it does not offer savings accounts with interest rates.
  • Cash held in a Fidelity brokerage account earns little to no interest unless you move it into a money market fund.
  • The Fidelity Government Money Market Fund is a low-risk option for holding cash, but its yield is lower than most online savings accounts and changes with market rates.
  • For a high yield savings account, you will need to open an account at a bank or credit union separate from your Fidelity investments.
  • You can keep both a Fidelity brokerage account and a separate high yield savings account at the same time.

What Fidelity offers instead of a savings account

If you have cash sitting in a Fidelity brokerage account and want it to earn something, your main option is the Fidelity Government Money Market Fund (ticker: SPAXX). This fund holds U.S. Treasury bills and other government debt that matures in a very short time — usually less than 90 days. Because the debt is backed by the U.S. government, the risk of losing money is extremely low.

The fund's yield changes daily based on what interest rates the government is paying. When interest rates are high, the fund pays more. When rates fall, so does the yield. You can check the current rate on Fidelity's website, but it typically lags behind what online savings banks are offering.

Another option is to straightforward hold cash in your Fidelity account without investing it in any fund. This cash earns no interest at all, which is why most people do not keep large amounts there for long.

Why Fidelity is not designed for savings

Fidelity exists to help you invest money in stocks, bonds, mutual funds, and other securities. Holding cash is a side feature, not the main purpose. Banks, by contrast, are built around taking deposits and paying interest on them. They use your deposits to make loans, and they pay you a portion of what they earn.

Because Fidelity is not a bank, it does not have the same regulatory structure or business model. It cannot offer you the interest rates that a bank can, and it does not need to — its customers are typically there to invest, not to park money and earn interest.

If you want to earn interest on savings, you need a financial institution whose main business is accepting deposits. That is what banks and credit unions do.

How to find a high yield savings account outside Fidelity

Online banks and some credit unions offer high yield savings accounts with rates that change based on the Federal Reserve's interest rate decisions. These rates are typically much higher than what Fidelity offers. To find one, search for "high yield savings account" and compare the current rates offered by different banks.

When comparing, look at the Annual Percentage Yield (APY) — this is the actual rate you will earn over a year, including any compounding. Make sure the bank is insured by the Federal Deposit Insurance Corporation (FDIC) or, if it is a credit union, by the National Credit Union Administration (NCUA). This insurance protects your money up to $250,000 if the bank fails.

You do not have to choose between Fidelity and a savings account. Many people keep both: a Fidelity account for investing and a separate high yield savings account at a bank for emergency funds or money they want to keep safe and earning interest.

What happens to your cash when you deposit it at Fidelity

When you deposit money into a Fidelity brokerage account, Fidelity holds it in what is called a sweep account. This is a holding place for cash that is not invested in any security. Fidelity automatically moves this cash into the Government Money Market Fund unless you tell it not to, but the yield is still very low.

Fidelity does not use your deposits to make loans the way a bank does. Instead, it holds your money in trust until you decide to invest it or withdraw it. Because Fidelity is not earning much from your cash, it does not pay you much interest on it either.

Frequently Asked Questions

Can I earn interest on cash in my Fidelity account?

Yes, but only if you move it into the Fidelity Government Money Market Fund. Cash sitting in your account without being invested earns nothing. The money market fund's yield is typically low and changes with interest rates.

Is the Fidelity Government Money Market Fund safe?

Yes, it is very safe because it invests only in U.S. government debt. However, it is not FDIC-insured the way a bank savings account is. The fund's value can fluctuate slightly, though the risk is minimal.

Can I use Fidelity as my main savings account?

You could, but it is not a good choice if earning interest matters to you. Fidelity's cash rates are much lower than online savings banks. It is better to use Fidelity for investing and keep a separate savings account at a bank for money you want to save.

What if I want to keep my money at Fidelity but earn more interest?

Your only option at Fidelity is the Government Money Market Fund, and its rate is set by the market. If you want higher interest, you will need to move your money to a bank or credit union that offers a high yield savings account.

Do I need to choose between Fidelity and a savings account?

No. You can have both at the same time. Many people use Fidelity for investing and a separate bank account for savings and emergency funds. There is no rule against having accounts at multiple institutions.