CDARS protects your money but what about the CD rates?

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Though the FDIC currently insures deposits for up to $250,000 — and will forevermore if the Dodd-Frank Act passes in its current form — some people need more of their cash insured.

They can get it by putting funds under separate ownership registrations at one institution or spread their wealth among several banks. Or they can take advantage of the Certificate of Deposit Account Registry Service, or CDARS.

The way CDARS works is surprisingly simple. Say a long-lost relative died and left you $1 million. You would find a bank that is a member of the CDARS network and invest your money with that bank. Four CDs in your name would be issued by four banks within the CDARS network.

All your interest payments and statements would then come to you through your initial bank relationship.

One drawback to the service is that you have no control over the CD rates you receive, and you get the same rate on all the CDs issued at that time.

Typically the yield through CDARS will be lower than the highest yields available. Banks pay transaction fees in the CDARS network and the cost is translated into lower CD rates.

Of course, investors could always do some homework and construct their own CD ladder using high-yielding CDs from a variety of banks. Use the Bankrate rate tables to find the best CD rates in your area.

For those who just want a safe place to put cash, CDARS offers convenience but not necessarily the highest CD rates.