CDARS is a service that allows depositors to place large sums into CDs while ensuring full FDIC insurance coverage by distributing funds across multiple banks.
What CDARS Is
CDARS, or Certificate of Deposit Account Registry Service, is a financial service designed for depositors who want to protect large deposits beyond the standard FDIC insurance limit of $250,000 per bank. It works by placing a depositor’s funds into CDs at multiple participating banks, while the depositor interacts with only one bank, simplifying management and reporting of accounts
How It Works
- A depositor places a large sum with a single CDARS-participating bank.
- CDARS divides the funds into amounts under the FDIC insurance limit and distributes them across a network of banks.
- Each CD is fully insured up to the FDIC limit, ensuring that even multi-million-dollar deposits are protected
- The depositor receives one consolidated statement and earns a single interest rate per maturity, avoiding the need to manage multiple accounts manually
Benefits
- Full FDIC Coverage: Protects deposits exceeding $250,000 without opening multiple accounts at different banks.
- Simplicity: One bank handles all transactions and reporting, reducing administrative burden.
- Competitive Returns: CDARS CDs typically offer interest rates comparable to other CDs and investment alternatives.
- Range of Maturities: CDARS offers CD terms from a few weeks up to several years, providing flexibility for planning.