How to Sell CDs Through Your Fidelity Account

You can sell CDs on Fidelity, but only if you own them through a Fidelity brokerage account

Fidelity lets you buy and sell certificates of deposit (CDs) through most brokerage accounts, but the process and your options depend on whether you hold CDs issued by Fidelity itself or CDs from other banks that Fidelity has in its inventory. You cannot sell a CD you opened directly with a bank — you can only hold it until maturity or contact that bank to close it early, which usually means paying an early withdrawal penalty.

If you bought a CD through Fidelity's brokerage platform, you can sell it on the secondary market before maturity. The price you receive depends on interest rates: if rates have risen since you bought the CD, you will receive less than you paid; if rates have fallen, you may receive more. Fidelity charges a transaction fee for selling CDs, which varies depending on the type of CD and current market conditions.

Key Takeaways

• CDs purchased through a Fidelity brokerage account can be sold before maturity on the secondary market, but bank CDs opened directly with another institution cannot be sold through Fidelity.
• The sale price of a CD on the secondary market moves inversely to interest rates — you receive less if rates have risen and more if rates have fallen since purchase.
• Fidelity charges a transaction fee when you sell a CD, and you may also face a bid-ask spread that reduces your proceeds.
• Selling a CD before maturity triggers a taxable event, and you report any gain or loss on your tax return for that year.
• If you hold a Fidelity-issued CD, you can redeem it early by contacting Fidelity directly, though early redemption may include a penalty depending on the CD terms.

The difference between brokered CDs and bank CDs

A brokered CD is a certificate of deposit that Fidelity purchases from a bank and then sells to you through your brokerage account. Because it lives in your brokerage account, you can sell it on the secondary market at any time before maturity. The secondary market is where investors buy and sell existing CDs from other investors, rather than buying new CDs directly from banks.

A bank CD is one you opened directly with a bank — whether that bank is Fidelity Bank or another institution. Bank CDs are not traded on a secondary market. If you want out before maturity, you must contact the bank that issued it and request early redemption, which usually triggers an early withdrawal penalty. That penalty is set by the bank when you open the CD and is stated in your CD agreement.

To check which type you own, log into your Fidelity account and look at your holdings. If the CD appears in your brokerage account under a ticker symbol or CUSIP number, it is a brokered CD and can be sold. If you opened it through Fidelity's deposit products (sometimes labeled as "Fidelity Bank" or "Fidelity Cash Management"), contact Fidelity directly to learn your early redemption options.

How to sell a brokered CD on Fidelity

To sell a brokered CD, log into your Fidelity account and navigate to your positions. Find the CD you want to sell and select it. Fidelity will show you the current bid price — the price you will receive if you sell right now. Review this price carefully, because it may be lower than what you paid if interest rates have risen.

Once you confirm the bid price, place a sell order just as you would for a stock or bond. Fidelity will execute the order, and the proceeds will land in your account's cash balance, usually within one to two business days. At that point, the CD is no longer yours — the buyer now owns it and will receive the remaining interest payments and principal at maturity.

Before you sell, check whether Fidelity is charging a transaction fee for that particular CD. Some CDs carry no fee; others charge a flat amount or a percentage of the sale. Fidelity's website or the CD details page will show any applicable fees. You will also encounter a bid-ask spread, which is the difference between what Fidelity will pay you (the bid) and what another investor would pay to buy it (the ask). This spread is normal in secondary markets and represents the dealer's profit.

How CD prices move with interest rates

When you sell a CD before maturity, the price you receive is not the face value you paid. Instead, it is based on what investors are willing to pay for the remaining interest payments, given current market interest rates.

If interest rates have risen since you bought the CD, new CDs now pay more than yours does. An investor buying your CD on the secondary market will pay less than face value to compensate for the lower rate. For example, if you bought a two-year CD paying 3 percent and rates have since climbed to 5 percent, a buyer will pay less than you did because they could get a better rate elsewhere.

If interest rates have fallen, the opposite happens. Your CD now pays more than new CDs, so a buyer will pay more than face value to lock in that higher rate. If you bought at 5 percent and rates have dropped to 2 percent, your CD is worth more on the secondary market.

This inverse relationship between rates and prices means selling a CD early can result in a loss or a gain. The longer the remaining term on your CD, the bigger the price swing tends to be when rates move. A CD with one month left will barely move in price; a CD with four years left can swing significantly.

Tax consequences of selling a CD early

Selling a CD on the secondary market creates a taxable event. If you sell for more than you paid, you have a capital gain. If you sell for less, you have a capital loss. You report this gain or loss on your tax return for the year you sell, using Schedule D (Capital Gains and Losses).

The gain or loss is calculated as the difference between your original purchase price and the sale price you received. For example, if you paid $10,000 for a CD and sold it for $10,200, you have a $200 capital gain. If you sold it for $9,800, you have a $200 capital loss.

Capital gains are taxed at either short-term or long-term rates depending on how long you held the CD. If you held it for one year or less, it is a short-term gain and taxed as ordinary income. If you held it for more than one year, it is a long-term gain and taxed at the preferential long-term capital gains rate (0 percent, 15 percent, or 20 percent, depending on your income).

You will also owe tax on the interest the CD earned while you held it, even if you sold it before maturity. Fidelity will send you a Form 1099-INT showing the interest earned, and you report that as ordinary income on your tax return.

Early redemption of Fidelity-issued CDs

If you own a CD issued directly by Fidelity Bank, you cannot sell it on the secondary market. Instead, you can redeem it early by contacting Fidelity. Fidelity-issued CDs typically allow early redemption, but the terms vary by CD product.

Some Fidelity CDs charge a fixed early withdrawal penalty (for example, 150 days of interest). Others use a tiered penalty that depends on how long you have held the CD — the penalty is steeper if you redeem very early and smaller if you redeem closer to maturity. A few Fidelity CD products have no early withdrawal penalty at all, though these are less common and usually offer lower rates.

To find out the early redemption terms for your specific CD, log into your account and view the CD details, or call Fidelity at the number on the back of your statement. Have your CD account number ready. Fidelity will tell you the exact penalty and the net amount you will receive after the penalty is deducted.

When selling a CD makes sense

Selling a CD early on the secondary market makes sense in a few situations. If you need cash and interest rates have fallen since you bought the CD, you may be able to sell it for more than you paid, giving you extra money beyond your principal. If you are repositioning your portfolio and want to move money into a different investment, selling lets you do that without waiting for maturity.

Selling usually does not make sense if interest rates have risen significantly, because you will take a loss. In that case, you are better off holding the CD to maturity unless you have a pressing need for the cash. You can also compare the loss on selling to the opportunity cost of holding a lower-rate CD — sometimes taking the loss and reinvesting in a higher-rate CD is the better long-term move, but that depends on your specific numbers and time horizon.

If you own a Fidelity-issued CD with an early withdrawal penalty, compare the penalty to any gain or loss you would realize by selling on the secondary market. Sometimes the penalty is smaller; sometimes the secondary market loss is smaller. The better choice depends on current rates and how much time is left on your CD.

Frequently Asked Questions

What happens if I sell a CD and interest rates drop even further?

Once you sell, you no longer own the CD, so further rate changes do not affect you. The buyer now owns it and will benefit if rates drop further. You have locked in the sale price you received, for better or worse.

Can I sell a CD I bought from my bank directly?

No. Bank CDs cannot be sold on a secondary market. You must contact the bank that issued the CD and request early redemption, which usually means paying an early withdrawal penalty. The only exception is if the bank itself offers a secondary market for its CDs, which is rare.

How long does it take to receive the money after I sell a CD?

Fidelity typically settles CD sales within one to two business days. The proceeds land in your account's cash balance and are available to withdraw or reinvest immediately after settlement.

Do I owe taxes on the interest if I sell the CD early?

Yes. You owe tax on all interest the CD earned from the purchase date through the sale date, even though you sold before maturity. Fidelity reports this on Form 1099-INT. You also owe tax on any capital gain or loss from the sale price difference.

What if Fidelity stops offering the CD I own?

Fidelity stopping the sale of new CDs does not affect CDs you already own. You can still hold it to maturity, sell it on the secondary market, or redeem it early according to the original terms. The CD agreement you signed when you bought it remains in effect.