CDARS: What you should know
By Todd Sehhat, Esq.
What is CDARS? CDARS stands for Certificate of Deposit Account Registry Service, a more familiar acronym now that the popularity for CDARS has been steadily increasing. CDARS is a service provided by a network of banks that allows account holders to take advantage of the FDIC coverage of multiple banks at once.
As many know, the standard FDIC insurance maximum provided at any one FDIC-insured bank is $250,000. This lower threshold frequently requires clients to open accounts at various financial institutions to take advantage of the FDIC coverage. Unfortunately, having several accounts means receiving account statements from multiple financial institutions.
With CDARS, however, clients deposit a large sum of money into one financial institution that is a member of the CDARS network. That deposit is then divided into small amounts and placed with a number of other banks that are CDARS network members. These institutions then issue CDs in amounts that are less than $250,000, thus, allowing the account holder to take advantage of the FDIC insurance through each institution. The account holder is also able to receive consolidated bank statements from the institution they initially deposited their funds with.
If you have any questions regarding CDARS or any other business concern, please contact us at info@hoffmanestatelaw.com or 404-255-7400.
