I woke up this morning to an email from a reader who was, quite frankly, a little panicked. They had just sold some shares of an S&P 500 index fund, saw a big number in their “Cash Available to Trade” balance, and tried to move that money to their bank account to pay a bill.
The result? Fidelity blocked the transfer.
If you’ve ever looked at your Fidelity account and wondered why you have $5,000 “available to trade” but only $2.50 “available to withdraw,” you are not alone. In today’s blog post, let’s explore the technical, and often frustrating, difference between these two numbers and how the 2026 T+1 settlement rules change the game for you.
✨ In this Article:
- Defining the two balances (in plain English).
- The 2026 T+1 settlement shift.
- The dreaded Good Faith Violation (GFV).
- Why your settled cash is almost always lower.
What is Cash Available to Trade?
Think of Cash Available to Trade as your “Buying Power.” This is the total amount of money Fidelity will let you use to buy new securities right now.
Specifically, this number includes:
- Your fully cleared, settled cash.
- Proceeds from stocks or ETFs you sold today (even if the money hasn’t actually arrived yet).
- Any uncollected deposits (like a check you just scanned) that Fidelity is “fronting” you in good faith.
Fidelity is essentially giving you an interest-free “advance” on money that is still in transit. You can use it to buy more stock, but you don’t actually own that money yet.
What is Settled Cash?
Settled Cash is the “Real Deal.” This is the portion of your balance that has fully cleared the banking and brokerage plumbing.
This is the only money you can use to:
- Withdraw to your bank account.
- Buy and then sell a stock on the same day without breaking any rules.
If you use unsettled funds to buy something and then sell it too quickly, you run into the “Good Faith Violation” territory, which we’ll cover in a second.
The 2026 Shift: Understanding T+1 Settlement
As of 2026, the financial world has moved to a T+1 Settlement cycle.
In the old days (way back in 2023), it took two business days for a trade to “settle” (T+2). Now, things move faster. If you sell a stock on Monday, that cash becomes “Settled Cash” on Tuesday.
- Trade Date (T): Monday
- Settlement Date (+1): Tuesday
Unsurprisingly, this faster pace is great for liquidity, but it still means you can’t sell a stock at 10:00 AM and expect to withdraw the cash to your bank at 10:05 AM. You still have to wait that one business day for the clearinghouse to do its job.
Comparison: Settled Cash vs. Available to Trade
To make this manageable, I’ve broken down the key differences in the table below.
| Feature | Cash Available to Trade | Settled Cash |
|---|---|---|
| Main Purpose | Buying new stocks/ETFs | Withdrawing or fast trading |
| Settlement Time | Immediate (includes pending) | T+1 (1 business day) |
| Withdrawal Ability | No | Yes |
| Risk of GFV | High (if you sell quickly) | None |
| Includes Deposits? | Yes (immediately) | No (takes 1-3 days) |
The Risk of the Good Faith Violation (GFV)
This is the part that trips up most new Fidelity investors.
A Good Faith Violation occurs when you buy a security using unsettled funds and then sell that same security before the funds used to buy it have settled.
Here is a classic example:
- Monday morning: You sell $5,000 of Stock A. Your “Available to Trade” balance is $5,000.
- Monday afternoon: You use that $5,000 to buy Stock B. (Fidelity allows this).
- Monday 3:00 PM: Stock B jumps 10%, and you sell it to lock in the profit.
BAM. That is a Good Faith Violation. Why? Because the $5,000 you used to buy Stock B didn’t actually “exist” in your account yet, it was still settling from the Stock A sale.
If you get three GFVs in a rolling 12-month period, Fidelity will restrict your account for 90 days. During that time, you can only buy stocks using settled cash. No more “advances.”
Why is my settled cash lower than my available to trade?
This is the #1 question we get at UseFidelity. There are three main reasons your settled cash is lagging behind:
- Recent Sales: You sold a stock within the last 24 hours. The proceeds are in your “Available to Trade” but won’t settle until the next business day.
- Uncollected Deposits: You just moved money from your bank via EFT. While Fidelity lets you trade with that money immediately, it takes 1 to 3 business days for the bank to actually send the funds. Until then, it isn’t “Settled Cash.”
- Open Orders: If you have a “limit order” sitting out there to buy a stock, Fidelity “locks” that cash. It is no longer considered available for other uses, even if it is technically settled.
How to Manage Your Cash at Fidelity (Step-by-Step)
If you want to avoid restrictions and manage your multiple Fidelity accounts like a pro, follow these steps:
- Check your Balances Tab: Before placing a trade, click the “Balances” tab in the Fidelity app or website.
- Locate “Settled Cash”: Look specifically for this line item. If you plan on buying and selling a stock in the same day (a “day trade”), do not exceed this amount.
- Watch the Calendar: Remember that weekends and market holidays don’t count toward settlement. A trade on Friday settles on Monday.
- Use Automatic Investing for the Long Term: If you aren’t trying to time the market, use Fidelity’s automatic investing tools. These systems are designed to use settled funds and avoid GFV issues entirely.
- Check for “Committed to Open Orders”: If your settled cash looks low, check if you have any old limit orders that never filled. Canceling them will instantly move that money back into your available balances.
📰 Frequently Asked Questions
Can I withdraw “Cash Available to Trade”?
No. You can only withdraw “Settled Cash.” If you try to withdraw unsettled funds, the transaction will likely be rejected, or you may be charged a fee/penalty if you are using a margin account.
Does T+1 apply to mutual funds?
Most mutual funds already settled in one day (T+1), but the 2026 regulations have harmonized this across stocks and ETFs. If you are switching between Fidelity and Vanguard funds, always check the specific settlement date on the trade confirmation.
How do I know when my cash will settle?
Fidelity provides a “Settlement Date” on your trade confirmation. You can also see this in your “Activity & Orders” tab. Simply look for the date listed under the “Settlement” column.
Is “Buying Power” the same as Cash Available to Trade?
Essentially, yes. In a cash account, your buying power is your available to trade balance. In a margin account, your buying power might be much higher because you are borrowing against your holdings.
Summary of Timelines & Fees
- Stock/ETF Settlement: T+1 (1 Business Day).
- EFT Deposit Collection: 1–3 Business Days.
- Good Faith Violation Limit: 3 violations per 12 months.
- Account Restriction Duration: 90 Days.
- Fidelity Trading Commissions: $0 (for online US stocks and ETFs).
Understanding these balances is the difference between a smooth trading experience and a 90-day “time out” from the markets. When in doubt, wait one extra day. Your account: and your sanity( will thank you.)