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Using CDARS to Protect Large Deposits

Written by Nickel - 9 Comments

Have you ever heard of the Certificate of Deposit Account Registry Service (CDARS)? If you haven’t, you’re not alone. CDARS is a private, for-profit service that spreads large deposits (anywhere from $10k above the FDIC insurance limit up to a maximum $50M) across numerous banks. This allows you to stay safely below FDIC limits (currently $250k per depositor per institution) without having to spread your money around yourself.

The primary advantage of CDARS is that it provide one stop shopping for opening CDs at multiple banks at once. You get a single rate, a single statement, and much higher than normal FDIC insurance coverage because you get “pass through” coverage from the various institutions that end up holding your money. Available maturities range from four weeks to five years, so you have a good bit of flexibility when it comes to the term of your investment.

While they advertise “no hidden fees,” my understanding is that the rates that you get through CDARS are slightly lower than the “normal” rates of the banks involved. In other words, you’re unlikely to get the best CD rates on the market if you invest via CDARS.

Obviously, this is a pretty specialized product, and most people won’t need it. If you do, however, you can get started with CDARS by contacting a member bank.

Published on December 7th, 2009 - 9 Comments
Filed under: Banking

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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9 Responses to “Using CDARS to Protect Large Deposits”

  1. 1
    John DeFlumeri Jr Says:

    That sounds a little bit risky, like there could be a chance of getting swindled at a one-stop shopping of many banks. I’ll do it my way.

  2. 2
    P Weiss Says:

    What happens when / if the Fed lowers the max insurance and you are already invested beyond that newer and lower insurance limit?

  3. 3
    Kevin@OutOfYourRut Says:

    Since you’re using fewer banks to spread out assets it may be safer in some ways than using multiple banks.

    Multiple banks mean more hands having access to your information, and identity theft is increasingly an inside jobs.

    Also, this would be worth investigating as a life simplification methods. Too many accounts equals greater complexity and more things to worry about.

  4. 4
    Betty Kincaid Says:

    CDARs was around before the FDIC increased the insurance limits so I’m sure they’ll go back to their old business model if the limits are decreased although I believe the new FDIC limits are here to stay.

    Here’s a video explaining the process: http://www.bmcb.com/videos/cdars.aspx

    This product is great for non-profits who have a lot of cash and need the protection of FDIC insurance.


  5. 5
    Paul Says:

    Another alternative is to use a credit union that is backed by the Excess Share Insurance Corporation. This is a private company that protects deposits up to an additional $250,000 above the FDIC/NCUA limit. I think that the combined $500,000 insurance is enough for the vast majority of individuals and small business, especially since checking accounts have unlimited protection.

  6. 6
    kim Says:

    Looks like an outstanding product to organizations with more than $2mm in cash because beyond that the administration would easily get out of hand.

    i wonder if any banks in the CDARS network failed. What happened to the depositers? any delays?

  7. 7
    Betty Kincaid Says:


    The money deposited through the CDARs program is FDIC insured which means you can access it even if the FDIC takes over one of the banks in the CDARs network.

  8. 8
    kim Says:


    I was wondering if there’s any banks in the CDARS network that failed in the past two years. I think there are around 2500 of banks in the network. Just trying to read more about ‘actual cases’.

  9. 9
    Betty Kincaid Says:


    I don’t know if any have failed and I don’t even know where to go to find the information.

    I suppose you could send an e-mail to CDARS and the FDIC and ask them if they’ve ever had a member failure.

    But remember that deposits (up to $50,000,000) held under the CDARS program are FDIC insured so even if your bank (or a participant bank) failed you would not lose any money.

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