Fidelity does not offer traditional savings accounts
Fidelity is an investment company, not a bank. They do not offer the kind of savings account you might open at a local bank or credit union — the kind where you deposit money, earn interest, and withdraw it whenever you need it. If you are looking for a basic savings account with FDIC protection (insurance that covers your money up to $250,000 if the bank fails), you will need to look elsewhere.
That said, Fidelity does offer products that work somewhat like savings accounts for specific purposes. Understanding the difference between what Fidelity offers and what a traditional savings account does will help you decide whether their products fit what you need.
Key Takeaways
- Fidelity is an investment company, not a bank, so they do not offer FDIC-insured savings accounts.
- Fidelity does offer a cash management account that holds money in money market funds and sweep programs, which may earn interest but work differently than a savings account.
- Money in Fidelity's cash management products is not FDIC-insured in the same way a bank savings account is, though some underlying funds may have SIPC protection.
- If you want a straightforward savings account with may provide FDIC protection, you will need to open one at a bank or credit union, not through Fidelity.
What Fidelity offers instead of savings accounts
Fidelity offers a cash management account, which is designed to hold money you are not actively investing. This account sweeps your cash into money market funds or other short-term investments that pay interest. The interest rate changes based on market conditions, just like rates at banks do.
The cash management account works well if you already have a Fidelity brokerage account and want to earn a bit of interest on money sitting there. You can move money in and out, and you can write checks or use a debit card in some cases. But it is not the same as a savings account because the money is invested in funds, not held as a deposit at a bank.
How FDIC insurance differs from what Fidelity offers
A traditional savings account at a bank comes with FDIC insurance. This means the federal government guarantees your money up to $250,000 per account holder per bank. If the bank fails, you get your money back. This protection is automatic — you do not have to do anything to get it.
Money in Fidelity's cash management account is not FDIC-insured. Instead, it may be covered by SIPC protection (Securities Investor Protection Corporation), which protects against brokerage firm failure but works differently and covers different amounts. SIPC protection is not the same as FDIC insurance, and the coverage limits and rules are different.
If having FDIC insurance is important to you — and for money you need to keep safe, it usually is — you should open a savings account at a bank or credit union instead of using Fidelity's cash management products.
When Fidelity's cash management account might make sense
Fidelity's cash management account is useful if you are already investing with Fidelity and want to earn interest on cash between trades or while you decide what to invest in next. It keeps your money in one place rather than requiring you to move it to a separate bank account.
It can also make sense if you have a large amount of money and want to spread it across multiple banks to stay within FDIC limits. Some people use Fidelity's sweep programs alongside bank savings accounts as part of a larger strategy, though this is more common for people managing significant amounts of money.
For most people who are looking for a straightforward place to save money and earn interest with full federal protection, a savings account at a bank or credit union is the clearer choice.
Where to open a savings account if Fidelity is not the right fit
If you want a traditional savings account, you have two main options: banks and credit unions. Banks are for-profit companies that offer accounts to anyone who meets their requirements. Credit unions are member-owned organizations that often offer similar products, sometimes with lower fees or better rates.
Both banks and credit unions offer FDIC-insured savings accounts. The interest rate, monthly fees, and minimum balance requirements vary widely, so it is worth comparing a few options before you choose. Many online banks offer higher interest rates than brick-and-mortar banks because they have lower overhead costs.
How to decide between Fidelity and a bank savings account
Ask yourself what you need the account for. If you are saving money for an emergency fund or a goal a few years away, and you want federal protection and simplicity, a bank or credit union savings account is the right choice. If you are already investing with Fidelity and want to park cash there temporarily while you manage your investments, Fidelity's cash management account might work.
You can also use both. Many people have a savings account at a bank for their emergency fund and use Fidelity or another investment company for money they are investing. There is no rule that says you have to choose one or the other.
Frequently Asked Questions
Can I use Fidelity to save money safely?
Fidelity's cash management account lets you hold money and earn interest, but it does not have FDIC insurance like a bank savings account does. If safety and federal protection are your main concerns, a bank or credit union savings account is the better choice. Fidelity works better if you are already investing there and want to hold cash temporarily.
What is the difference between FDIC and SIPC protection?
FDIC insurance protects bank deposits up to $250,000 per account holder per bank if the bank fails. SIPC protection covers brokerage accounts up to $500,000 (including $250,000 in cash) if the brokerage firm fails. They protect against different types of failure and have different coverage limits. FDIC is what you get with a bank savings account; SIPC is what you get with a brokerage account.
Does Fidelity pay interest on cash in my account?
Yes, Fidelity's cash management account sweeps your cash into money market funds and other short-term investments that pay interest. The rate changes based on market conditions. However, this interest is not may provide the way some bank savings accounts offer may provide rates, and the rate is typically lower than what you might find at a high-yield savings account at an online bank.
Can I write checks from a Fidelity cash management account?
Some Fidelity cash management accounts offer check-writing and debit card access, but this varies depending on the specific product and your account type. Check Fidelity's current offerings or contact them directly to see what features are available on the account you are considering.
Should I keep my emergency fund at Fidelity or a bank?
For an emergency fund, a bank or credit union savings account with FDIC insurance is the safer choice. You want to know your money is protected by the federal government and that you can access it without worrying about market conditions. Save your emergency fund at a bank, then use Fidelity or another investment account for money you are investing for longer-term goals.