CDARS is one of the safest and smartest vehicles for investors looking to protect their large-dollar deposits while earning CD-level returns. CDs placed through CDARS offer:
- Access to multi-million-dollar FDIC insurance;1
- The ease of working through one trusted relationship, earning one rate per maturity, and receiving consolidated statements;
- Relief from ongoing collateralization—because CDARS deposits are eligible for FDIC protection, you may not need to perform the time-consuming tasks of continually collateralizing your deposits and tracking changing collateral values on a recurring basis, if you are accustomed to doing so;
- The power of daily compounding;
- A finite maturity date (in contrast to auction-rate or some adjustable-rate securities); and
- The ability to have the amount of your deposit available to support lending initiatives that strengthen the local community.2
How can deposits greater than the standard FDIC insurance maximum ($250,000) be insured by the FDIC?
The standard FDIC insurance maximum is $250,000 per insured capacity, per bank. So, you can run around to multiple institutions to deposit your funds to receive the same coverage you can access using CDARS. Or you can place your large-dollar deposit with us, a member of the CDARS Network. Your deposit is divided into smaller amounts and placed with other CDARS Network members, each an FDIC-insured institution. Then, those member institutions issue CDs in amounts under $250,000, so that your deposit is eligible for FDIC insurance at each member bank. By working directly with us, you can access coverage from many (and receive just one regular statement from us).
Who has custody of my funds?
Funds placed through CDARS are deposited only into FDIC-insured banks. We act as
custodian for your CDARS deposits, and the subcustodian for CDARS deposits is the
Bank of New York Mellon (BNY Mellon), the largest custodian in the world.3
Unique to CDARS, you as a depositor can obtain a confirmation of records maintained by BNY Mellon as subcustodian to reconcile those records with the statements received from us. At any time, as often as desired, you as a depositor can obtain a certified statement from BNY Mellon that confirms the exact amount of your CDs, including principal balance and accrued interest, for each FDIC-insured institution that issues a CD through CDARS.
You can submit a request for the certified statement, along with BNY Mellon’s processing fee, through us. BNY Mellon will send the certified statement directly to you or to another party designated by you, such as an auditor.
How can the amount of my funds be used locally if my CDs are issued by financial institutions all over the country?
When we exchange deposits with other CDARS Network members on a dollar-for-dollar basis, the same amount of funds placed through the Network returns to us. As a result, the total amount of your original deposit can remain with our bank and be used for local lending. (CDARS® ReciprocalSM transactions only.)2
Is my account information safe?
Your account information is protected; your relationship remains between you and us.
What happens if a CDARS Network member bank fails?
Most of the banks that have failed in the United States in recent years were not CDARS Network members or did not hold any CDARS deposits when they failed. When a Network member has failed, the bank’s CDs issued using CDARS in most cases have been transferred to a healthy institution—the FDIC’s preferred method for handling bank failures. In cases where the FDIC has been unable to find a healthy institution willing to accept such a transfer, it has arranged for the payment of the insured principal and accrued interest to the depositors. This payment has usually occurred within a matter of days.
 When deposited funds are exchanged on a dollar-for-dollar basis with other banks in the CDARS Network, our bank can use the full amount of a deposit placed through CDARS for local lending, satisfying some depositors’ local investment goals or mandates. Alternatively, with a depositor’s consent, our bank may choose to receive fee income instead of deposits from other banks. Under these circumstances, deposited funds would not be available for local lending.
 Please see www.bnymellon.com/about/index.html for details.
CDARS is a registered service mark, and Reciprocal is a service mark, of Promontory Interfinancial Network, LLC.