|
Full FDIC Insurance for up to $50 Million
By: Joe Rippe
With CDARS, Certification of Deposit Account Registry Service, now there is a way to have full FDIC insurance coverage on CD investments larger than $100,000 up to $50 million. Normally when investing more than $100,000 in a single bank, only the first $100,000 would be eligible for FDIC coverage. With CDARS, the entire amount is eligible for full FDIC coverage.
First you sign a deposit placement agreement with a bank and then make a single deposit for your entire amount. Then you agree on an interest rate and maturity date that best matches your investment goals. Funds are submitted to federally insured member banks within the CDARS network which includes 1,350 institutions. Once this process is complete, member banks issue CDs in denominations under $100,000. Since your money is invested in separate accounts at separate banks, your entire amount is eligible for FDIC insurance.
Even though you hold multiple accounts, you work with one bank. They money does not actually change hands between the banks, they only swap record keeping entries with one another. Additionally, there is no confusion tracking multiple interest rates; you receive one statement each month which shows interest earned on all your CDs which carry the same rate. Confidential information remains protected and there is no cost to the customer. The only downside is if the customer wants to cash the CD in before it matures, they can lose some, or all, of the interest earned.
Many can see the benefit of CDARS including individuals, public fund managers, non-profits, businesses, and fiduciaries. Access to full FDIC coverage can satisfy your legal requirements for fully insured deposits. In Addition, CDARS can eliminate the need for surety bonds and the non-stop hassle of tracking collateral.
Source: www.cdars.com
|
Full Newsletter
