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CDARS: Get An FDIC Insurance Amount Above $250,000

CDARS is a service offered by some banks that allows depositors to access multi-million-dollar FDIC insurance coverage.

Written by:S.J. Jones
Updated:June 4, 2024

CDARS is a service offered by some banks that allows depositors to access multi-million-dollar FDIC insurance coverage by spreading large deposits across multiple banks within the CDARS network.

This means that even if a single bank fails, the depositor's funds up to the FDIC limit are still protected.

CDARS stands for Certificate of Deposit Account Registry Service. It was first launched in 2003 by Promontory Interfinancial Network, now known as IntraFi Network. Since then, it has become a popular service for depositors looking to maximize FDIC insurance coverage on large deposits.

How CDARS works

A depositor places a large deposit with a bank participating in the CDARS network.
The bank divides the deposit into smaller amounts and places them in CDs at other banks within the network.
Each CD is insured up to the FDIC limit by the bank where it is held.
The depositor receives one statement from the originating bank, showing the total interest earned and the maturity dates of all CDs.

Who should use CDARS

CDARS is a good option for depositors who:

Have large amounts of money to deposit
Want to maximize FDIC insurance coverage
Want the convenience of working with one bank

CDARS can be a valuable tool for individuals or businesses with large deposits seeking maximum FDIC insurance protection. But there are some pros and cons to consider.

CDARS Pros and Cons

Pros:

Enhanced FDIC Insurance: The most significant advantage is the ability to obtain FDIC insurance coverage on deposits exceeding the standard $250,000 limit. This provides peace of mind, knowing your money is safe even if the bank fails.
Convenience: You deal with a single bank, even though your deposits are spread across multiple institutions. This simplifies account management and provides a consolidated view of your holdings.
Competitive Rates: CDARS rates are often competitive with other CD products, and you can negotiate a single rate for all your deposits.
No Hidden Fees: CDARS typically doesn't have annual fees, subscription fees, or transaction fees.

Cons:

Limited Liquidity: CDARS deposits are typically locked in for a fixed term, and early withdrawal penalties may apply. This can be a disadvantage if you need access to your funds before maturity.
Limited Investment Options: CDARS deposits are limited to CDs, so you don't have the flexibility to invest in other products like money market accounts or bonds.
Lower Rates than Jumbo CDs: In some cases, CDARS rates may be slightly lower than jumbo CDs offered by individual banks. However, this is offset by the enhanced FDIC insurance coverage.
Bank Fees: While CDARS doesn't have direct fees, participating banks may charge a fee for the service, which could slightly reduce your overall return.