CDARS - Certificate of Deposit Account Registry Service

CDARS - Certificate of Deposit Account Registry Service

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CDARS is a service provided by select banks that allows you as a depositor to get up to $50,000,000 in FDIC insurance for Certificates of Deposit.

CDARS is a service provided by select banks that allows you as a depositor to get up to $50,000,000 in FDIC insurance for Certificates of Deposit. The system works by distributing your deposits to other banks in the CDARS network so that no one bank holds over the maximum amount insured by the FDIC.  The FDIC currently insures your deposits only up to $250,000 in deposits per ownership class at a single financial insitutions.   This insurance covers all deposits (savings, checking accounts, etc.) in addition to CDs at that particular institution.

For the customer, this process is seamless.

Here's an example of how CDARS works:

  • You walk into your bank with $2,000,000 you want to deposit into a 3-year CD.
  • They quote you a rate and tell you it will be distributed via the CDARS network. You agree and sign the consent form.
  • After you make the deposit, the money is broken up into denominations of less than $250,000 (so that accrued interest is covered) and then distributed to other participating banks that are FDIC insured.  Therefore, $2 million might be divided among 9 or 10 banks, instead of 8.  
  • Your money collects interest, and is fully FDIC protected. You receive a statement from the original bank where you made the deposit.
  • When your CD expires, you can go to the original bank and withdraw the full amount or roll the money over for another period.

The Benefits of CDARS

  • Up to $50,000,000 in FDIC insurance. Using CDARS you can insure up to $50,000,000 with the FDIC.
  • One Bank. There is no longer any need to run around to different banks opening accounts to ensure your money is fully FDIC insured.
  • One Statement. You receive one statement from the original bank.
  • One Rate. You receive one rate regardless of how many banks are used to insure your money.

The Disadvantages of CDARS

  • Potentially lower rate. You will likely receive a much lower rate because CDARS charges banks a transaction fee. Banks often pass this fee on to their customers in the form of a lower rate. Banks may waive this fee for good customers, but you will likely be much better off unless you are super wealthy by dividing your money yourself among the leading CD rates on BestCashCow.
  • Lack of Certainty. You do not get to choose which banks your funds are sent to nor do you even know. The only thing you do know is that every bank that accepts your deposits will be FDIC insured.

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Today's Highest Online CD Rates

Bank Product Term Interest Rate (APY)
Live Oak Banking Company 1-Year 0.75% APY with $2,500 minimum
CFG Bank 1-Year 0.67% APY with $500 minimum
Comenity Direct 1-Year 0.65% APY with $1,500 minimum
Pentagon 3-Year 1.00% APY with $1,000 minimum
Bank5 Connect 3-Year 0.85% APY with $500 minimum
Connexus 3-Year 0.81% APY with $5,000 minimum
Pentagon 5-Year 1.25% APY with $1,000 minimum
Connexus 5-Year 1.06% APY with $5,000 minimum
Popular Direct 5-Year 1.00% APY with $10,000 minimum

See More Online CD Rates →


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