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.