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Use CDs to beat FDIC limit

By Sheyna Steiner ·
Wednesday, September 5, 2012
Posted: 5 pm ET

The Federal Deposit Insurance Corporation, or FDIC, insures deposits of up to $250,000 "per depositor, per insured bank, for each account ownership category," the FDIC's website says.

By keeping accounts under various ownership categories, such an individual account, an individual retirement account and a revocable trust, a depositor can get much more than $250,000 worth of FDIC coverage and keep all their money under one roof, so to speak.

That may not always be feasible. The various account registrations may not work for your situation or you'll just have cash in excess of the FDIC limit for a couple of months as in the case of a real estate sale or a settlement. There is a way to make sure that your deposits are covered by FDIC insurance without traveling to several different banks or maintaining multiple banking relationships.


The Certificate of Deposit Account Registry, or CDARS, is handy for situations when there's too much cash to be covered under normal FDIC limits.

After filling out the deposit placement agreement at a bank in the CDARS network, other banks within the network issue CDs under the FDIC limit to ensure that the principal and interest will be covered. All the CDs with the same maturity are issued at the same CD rate and the depositor receives one statement showing interest earned.

One other benefit is that the service is free for depositors.

"In fact, in the document they receive at the transaction, there is a disclosure that says you will not be charged a fee for CD placements. We do charge the bank members," says Phil Battey, senior vice president of external affairs at Promontory Interfinancial  Network.

Have you used CDARS? I'd love to hear from someone who has used the service.

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Follow me on Twitter @SheynaSteiner.

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