Are Fidelity Brokerage Accounts FDIC Insured? | Know The Real Coverage

No—most assets in a Fidelity brokerage account aren’t FDIC-insured; FDIC can apply only to eligible cash held at program banks, while SIPC covers custody of securities.

You’re probably asking this after a transfer, a stock sale, or a dividend payout that left a bigger-than-usual cash balance sitting in your account. You’re not asking whether the market can drop. You’re asking what happens if a financial firm fails.

The clean answer is: it depends on what you hold and where that money is held. At Fidelity, “cash” can mean a bank deposit sweep, a money market mutual fund, or a short settlement balance. Those are not the same thing, and the coverage rules treat them differently.

What FDIC insurance actually covers

FDIC insurance is tied to bank deposits at FDIC-insured banks. If an FDIC-insured bank fails, the FDIC pays depositors up to coverage limits that are set by depositor, bank, and ownership category. You don’t buy FDIC insurance as an add-on; it applies automatically to eligible deposit accounts at an insured bank.

The FDIC lays out the basics, including the common $250,000 limit per depositor, per FDIC-insured bank, per ownership category, plus examples showing how totals can change when ownership categories differ. See the official FDIC Deposit Insurance FAQs.

Two plain-English points help you avoid wrong assumptions:

• FDIC insurance is for deposits at banks, not for investments like stocks or mutual funds.
• FDIC insurance doesn’t stop price swings; it’s designed for a bank failure event.

Why a brokerage account is different from a bank account

Fidelity is a brokerage firm. Brokerage accounts hold securities and cash for investing. That setup is not the same as a checking or savings account held at a bank.

Still, a brokerage account can link to bank coverage when the brokerage uses a cash “sweep” that moves eligible cash into deposit accounts at banks. When that happens, the cash is held as a deposit at a bank, which is the condition that lets FDIC rules apply.

This is where people get tripped up: a brokerage account can show a cash balance even when that “cash” is actually a money market mutual fund. A money market fund is an investment product, not a bank deposit, so FDIC insurance doesn’t attach to it.

Are Fidelity Brokerage Accounts FDIC Insured? The answer by account balance type

A Fidelity brokerage account itself is not “FDIC-insured” in the way a bank account is. What matters is whether some portion of your uninvested cash is swept into deposit accounts at program banks through an FDIC sweep feature.

Fidelity explains how its cash sweep options work, including that deposits held at program banks may be eligible for FDIC insurance (subject to FDIC rules and limits), and that certain sweep arrangements can also use a money market overflow that is not FDIC-eligible. See Fidelity’s Financial Security: Account Protection page for the product-level description.

So the real answer is a split:

• Cash swept into deposit accounts at program banks: can be FDIC-eligible, subject to FDIC limits and ownership rules.
• Securities like stocks, ETFs, and mutual funds: not FDIC-insured.
• Money market mutual funds used for cash: not FDIC-insured.

Where SIPC fits for brokerage accounts

For brokerage accounts, the common protection framework is SIPC. SIPC is designed for a broker-dealer failure where customer assets are missing from accounts. It is about custody and return of missing assets, not about investment performance.

SIPC describes its coverage as up to $500,000 per customer, including up to $250,000 for cash, in a SIPC-member brokerage firm failure scenario where assets are missing. Read SIPC’s own definition on What SIPC Protects.

Fidelity also publishes a practical explainer that mirrors the same limits and clarifies what SIPC does and does not do. See What is SIPC coverage and how does it work?.

It helps to keep the two programs in separate mental boxes:

• FDIC: bank deposits, bank failure event.
• SIPC: brokerage custody, missing assets after a brokerage failure.

What you hold changes the coverage

When someone says “my Fidelity account is insured,” they may be mixing three different things: deposit coverage for swept cash, SIPC coverage for custody of securities, and normal market risk (which neither FDIC nor SIPC removes).

The table below maps common holdings to the protection rules that can apply. Use it as a sorting tool to identify which part of your account sits under FDIC rules, which part sits under SIPC rules, and what remains normal market exposure.

Holding in a Fidelity brokerage account	Coverage that can apply	Trigger and limit snapshot
Cash swept into program-bank deposit accounts	FDIC eligibility at the banks	Bank failure event; limits depend on bank and ownership category
Cash in a money market mutual fund used as a core position	SIPC (custody)	Broker failure with missing assets; up to $500k total, with a $250k cash limit
Stocks	SIPC (custody)	Broker failure with missing assets; protection is about return of missing shares
ETFs	SIPC (custody)	Same custody concept as stocks; not a market-loss shield
Mutual funds (non–money market)	SIPC (custody)	Broker failure with missing assets; return of missing fund shares
Bonds and Treasuries held as securities	SIPC (custody)	Broker failure with missing assets; return of missing securities
Brokered CDs held through the brokerage	FDIC eligibility at issuing bank + SIPC custody concept	CD portion can be FDIC-eligible at the issuing bank; SIPC can apply if assets are missing at the broker
Uninvested cash during trade settlement	Depends on where it is held	Can be swept to banks (FDIC eligibility) or held at broker (SIPC custody limits)

Three common mix-ups that lead to wrong assumptions

Cash in a money market fund is not a bank deposit

Money market funds can feel like cash because they’re built for liquidity and typically aim to keep a steady share price. Still, they are mutual funds. That means FDIC insurance does not apply because there is no bank deposit being insured.

In a broker failure scenario where assets are missing, SIPC rules can apply to covered accounts and assets under its limits. In a market stress scenario where a fund’s share price falls, that is an investment outcome, not a bank failure event, so FDIC does not step in.

SIPC limits and FDIC limits are measured in different ways

SIPC has a stated limit structure (with a cash cap inside the total). FDIC limits are tied to each bank and ownership category. That means a person can have FDIC-eligible deposits at several different banks and still stay within FDIC limits at each bank.

If your Fidelity cash is swept to program banks, you still need to watch your total deposits at those same banks outside Fidelity. FDIC limits don’t reset just because the deposit came through a sweep.

Neither program protects you from market moves

If a stock drops, that’s market risk. If a bond price falls when yields rise, that’s market risk. FDIC and SIPC are focused on institutional failure scenarios, not everyday price movement.

How to tell where your Fidelity cash is sitting

You don’t need to guess. You can usually confirm your setup in minutes by checking what Fidelity lists as your cash “core” holding and how your account’s cash management feature is described.

1. Find the core position or cash holding name. The label will often tell you if cash is in a deposit sweep position or in a money market mutual fund.
2. Read the cash sweep description tied to your account. Fidelity’s account protection page describes the sweep mechanics and the split between bank deposits and other cash arrangements.
3. Check whether the account uses program banks. If your cash is swept to program banks, list those banks and compare them to banks where you already hold deposits outside Fidelity.

Once you know which bucket your cash uses, you can match your choices to your goal: bank-style deposit coverage for idle cash, or brokerage-based cash handling for trading convenience.

Ways to line up cash handling with your goal

When you want FDIC-eligible cash for a large idle balance

• Use a sweep option that places cash into program-bank deposit accounts when your account type offers it.
• Track the total you hold at each program bank across all channels, not just inside Fidelity.
• Use ownership categories only when they reflect how the account is truly owned (single, joint, trust, and so on), since FDIC limits hinge on that structure.

When you want cash staying inside the brokerage for investing and trades

• A money market mutual fund core position can keep cash available for purchases and settlements inside the brokerage.
• Expect SIPC to be about missing assets after a brokerage failure, within its limits, not about protecting a share price.
• Know that FDIC insurance does not apply to a money market mutual fund.

When you’re parking cash only for days or weeks

• Decide in advance where large proceeds should land after a sale.
• Recheck your cash handling after account changes, since settings can differ by account type.
• Keep records of where cash is held when balances are high, so your limit tracking is easy.

Quick audit checklist for your own account setup

The fastest way to reduce confusion is to run a short audit when your cash balance spikes. The table below is built for that moment.

Audit step	What to look for	What it tells you
Identify your core cash holding	The name of the position shown for cash	Deposit sweep vs. money market fund vs. broker cash balance
Confirm whether cash is swept to banks	Account cash sweep description	Whether FDIC eligibility can apply to part of your cash
List the program banks involved	Program bank roster tied to the sweep	Which banks to include when totaling deposits for FDIC limits
Total your deposits at those banks	Other checking, savings, CDs at the same banks	Whether you’re near FDIC limits at any single bank
Check SIPC expectations for the brokerage	SIPC limit summary and covered assets	How custody coverage is capped, including the cash cap inside the total
Decide what the cash is for	Time horizon: bills, house down payment, or investing soon	Which cash holding style matches your use case

The simplest way to answer this for yourself

If you want a one-minute decision tree, use these two questions:

1. Is your idle cash being swept into deposit accounts at program banks through a sweep that is described as FDIC-eligible?
2. If not, is your cash held in a money market mutual fund or held as a brokerage cash balance?

If your cash is held at banks through the sweep, FDIC eligibility can apply within FDIC rules and limits. If your cash is in a money market fund, FDIC does not apply, and SIPC only comes into play for a brokerage failure with missing assets under its limits. If your cash is held at the broker, SIPC rules may apply in that same broker-failure scenario.

Once you pin down where the cash sits, the next move is simple: keep totals under the right limits at each bank, spread deposits across banks when needed, or adjust the cash option your account uses when that choice is available.