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Is Fidelity FDIC Insured?

Minho Investment Association| Updated January 22nd, 2024

Fidelity is a major player in the financial world, offering various ways to invest your money. But, when thinking about safety, it’s crucial to grasp the details.

So, is Fidelity FDIC insured? Fidelity is not a bank but a brokerage firm. As such, Fidelity’s accounts are not FDIC-insured. However, there’s a crucial caveat – uninvested cash balances within these accounts are indeed eligible for FDIC insurance coverage. So, technically, Fidelity is not under the FDIC, but in practice, your money is protected since it uses FDIC insurance banks to deposit it.

Throughout this article, we will examine Fidelity’s structure intricately and how it affects investor protection regarding FDIC Insurance.

Is Fidelity FDIC Insured?

When considering Fidelity and FDIC insurance, an important factor pertains to safeguarding your investments.

Despite Fidelity not being a bank but a brokerage firm (not FDIC-insured), the uninvested cash balances are eligible for FDIC insurance.

This signifies that the money you haven’t used for investing is secured, with protection extending up to $250,000 per person per bank.

Understanding the distinction between FDIC-insured accounts and other investment products is of utmost importance.

While FDIC insurance guarantees the safety of uninvested cash in your Fidelity brokerage account, other investments like stocks, bonds, and mutual funds do not fall within this protective coverage (explained below).

Understanding Fidelity: A Closer Look

Fidelity, a notable presence in the financial realm, offers a range of investment and wealth management solutions. As an established platform, Fidelity caters to a diverse audience seeking various avenues for asset growth.

At its core, Fidelity offers various account options for your investments. These include self-directed brokerage, managed accounts, and education savings. 

Within Fidelity accounts, you can access a wide selection of investment assets: stocks, bonds, options, mutual funds, ETFs, REITs, crypto, and more. This variety empowers investors to craft portfolios aligned with their preferences and risk tolerance, ensuring a comprehensive approach to their financial goals.

Fidelity’s user-friendly interface and intuitive platforms allow investors to manage portfolios, conduct research, and execute trades with ease. Moreover, Fidelity places a strong emphasis on education and customer support. The platform offers educational materials, webinars, and research resources.

Understanding FDIC Insurance

The Federal Deposit Insurance Corporation (FDIC) insurance stands as a cornerstone of financial security for depositors in the United States. This protection offers peace of mind by safeguarding your funds against potential bank failures.

In essence, FDIC insurance is a safety net for your deposits, covering a wide range of accounts, including savings, checking, and certificates of deposit (CDs). The assurance extends up to $250,000 per depositor per bank, ensuring that even in the face of unexpected challenges, a significant portion of your funds remains safeguarded.

It’s important to note that FDIC insurance applies exclusively to traditional banking products, not investments like stocks, bonds, mutual funds, or other securities. The coverage primarily pertains to cash deposits, ensuring that even if a bank faces financial difficulties, your hard-earned money is shielded up to the specified limit.

FDIC deposit insurance covers: FDIC deposit insurance does not cover:
Checking accounts Stock investments
Negotiable Order of Withdrawal (NOW) accounts Bond investments
Savings accounts Mutual funds
Money Market Deposit Accounts (MMDAs) Life insurance policies
Certificates of Deposit (CDs) Annuities
Cashier’s checks Municipal securities
Money orders Safe deposit boxes or their contents
Other official items issued by an insured bank U.S. Treasury bills, bonds, or notes
Crypto assets

Fidelity Cash Management Account

The Fidelity Cash Management Account merges a conventional checking account with a brokerage account. Investors can accrue interest on cash balances while accessing short-term investment possibilities. 

The Fidelity Cash Management Account is a unique exception in terms of FDIC insurance. Cash balances in this account are placed in an FDIC-Insured interest-bearing account at program banks. While deposits in program banks are FDIC insured within coverage limits, funds directed to the Money Market Overflow are not FDIC insured but remain eligible for SIPC coverage under SIPC rules*. Transfers between program banks and your account are managed by Fidelity. You can check the list of Program Banks on Fidelity’s Website.

Is Fidelity FDIC Insured? 1

Source: Fidelity

*SIPC (Securities Investor Protection Corporation) coverage safeguards funds invested in securities, such as stocks and bonds, in case of broker insolvency. While the Fidelity Cash Management Account’s Money Market Overflow isn’t FDIC insured, it may still be eligible for protection under SIPC rules.


In summary, our exploration of Fidelity and FDIC insurance highlights the important connection between financial services and safety. Fidelity offers different types of accounts to help with various financial goals, and each kind of account comes with its advantages and coverage. FDIC insurance is like a safety cushion for regular bank accounts, providing security during uncertain times.

However, there’s an interesting exception with the Fidelity Cash Management Account. Regular cash balances in Fidelity accounts are protected by FDIC insurance up to a certain amount. But the way the Money Market Overflow works follows the rules of another protection program called SIPC.

Minho Investment Association

The Minho Investment Association (MIA) is a junior initiative from the University of Minho (Portugal), which aims to promote financial literacy among young people.