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Until now, there were only three ways an investor could enjoy full FDIC insurance on deposits larger than $100,000: open and maintain accounts with multiple banks, invest with one bank by transferring ownership and registering accounts in the names of family members or corporate affiliates, or work through a broker-dealer.
All that has changed
Through the Certificate of Deposit Account Registry ServiceSM
(CDARSSM), large deposits can now be placed by a participating bank into smaller-denomination
CDs at multiple institutions. This service can offer you significant benefits:
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Safety of FDIC insurance for large deposits.
Because funds are placed in FDIC-insured CDs that are issued by network members, your total deposits over $100,000 can be eligible for full FDIC coverage, up to $1 million or more. -
CD interest.
Rates may compare favorably with those of other high-quality, fixed income investments. -
Management convenience.
You can manage all of your CD investments through a single relationship. -
Security of working with a trusted, local source.
Your transaction is managed by the people you know and trust at your local bank.
Interest is paid directly to you or to an account that you designate. Each month, your bank will send you a statement listing all your CDs, the banks issuing the CDs, maturity dates, interest earned, and other details.
At the end of the year, your bank will send you a consolidated 1099 that reports your taxable interest income.
Other key benefits
By placing your funds through CDARS, you can earn income, preserve capital, access FDIC
insurance on your total deposit, and benefit from the security that comes with a consistent banking
relationship.
Through CDARS, specific advantages are offered to institutional and business customers
Public-sector and nonprofit organizations[2]
- Funds are placed through the institution of your choice, effectively satisfying some organizations' mandate to invest locally[3].
- Because all funds are eligible for FDIC insurance, deposits may not need to be collateralized to conform to your investment policies.
- Cash managers can have an alternative to commercial paper, money market funds, and repurchase agreements.
- Financial officers and small-business owners can enjoy access to FDIC-insured deposits through a local institution.
1 - Funds are submitted for placement through CDARS Deposit Placement Agreement with a particular bank. The agreement contains important information and conditions regarding the placement of funds through CDARS. Please read the agreement carefully before signing it.
2 - Public-sector depositors are responsible for complying with restrictions on the deposit of public funds imposed by state and local jurisdictions, some of which may prevent the placement of public funds through CDARS. Please speak with a customer service representative at your bank if you have questions.
3 - When you place funds through CDARS, the bank may receive an equal amount of reciprocal deposits from other banks in the Network, satisfying some organizations' local investment mandates. Alternatively, the bank, with your consent, may choose to receive free income rather than reciprocal deposits.
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