CDARS: Protection Above FDIC Limits
April 12, 2009 by Tisa Silver
Filed under Finance
Photo by iChaz, courtesy of flickr
FDIC insurance protects bank depositors in instances of bank failure and last year Congress temporarily raised the FDIC’s limit to $250,000 (from $100,000) per account, per bank.
How can you protect your dollars above the limit?
The Certificate of Deposit Account Registry Service, known as CDARS, can help you insure up to $50 million. Here’s how it works: Your bank will break your account into small pieces with the value of each piece falling below the FDIC’s $250,000 limit.
Each piece is used to purchase certificates of deposit (CDs) at your bank and other CDARS participating banks. Each set of CDs is eligible for FDIC insurance. The more money you have, the more banks will be involved.
Involving other banks makes CDARS sound complicated, but participants receive one monthly statement to summarize their holdings and one interest rate on their entire balance.
There are approximately 2,800 banks which participate in the CDARS program. To learn more about CDARS, read How CDARS Works from the CDARS Web site. To find a CDARS participating bank, use their bank locator.
