| CDs Offered by Fidelity |
|
| Fidelity offers a type of certificate of deposit (CD) called a Brokerage CD. |
|
| Brokerage CDs are issued by banks for the convenience of the brokerage firms’ customers. The deposits are obligations of the issuing bank. The CDs are usually issued in large denominations. The brokerage firm then divides them into smaller denominations for re–sale to their customers. |
|
| Brokerage and bank CDs both carry Federal Deposit Insurance Corporation (FDIC) insurance up to $250,000 per financial institution, per owner on each registration and $250,000 for qualified retirement accounts. On October 3, 2008, certain FDIC insurance coverage limits were temporarily increased from $100,000 to $250,000. These temporary increases will remain in effect until December 31, 2013. Additional information can be found on the FDIC website. CDs which mature after 12/31/2013 will have the $250,000 coverage up to the 12/31/2013 date. After that the insurance will revert to the $100,000 level. |
|
|
| Investing in brokerage CDs is similar to bank CDs, in that investors agree to place their funds with the issuing bank for the term of the CD, and the CD earns interest at a specified rate. |
|
| At maturity (or earlier if there is a call option) the investors' funds plus interest will be returned. During the term of the CD your funds will earn an interest rate stated at the time of initial deposit. |
|
| Advantages of Brokerage CDs |
|
|
| Brokerage CDs, like those offered by Fidelity Investments, may be traded on the secondary market and thus are generally more liquid than bank CDs. Although a brokerage CD will return an investor's principal at maturity, its value if sold prior to maturity will fluctuate based on size, time remaining before maturity and the level of interest rates. |
|
|
| A brokerage CD is portable and can be transferred from one brokerage firm to another, which allows the owner to consolidate assets at one firm. |
|
|
| Brokerage CDs are offered at competitive market interest rates. |
