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Hello Everyone,
As many of you know, when President Bush signed the rescue package into law
on Friday the FDIC (Federal Deposit Insurance Corporation) raised its insurance
limit on bank accounts from $100,000 to $250,000 .
But what if you sold your house, sold your business, received an inheritance, etc
and the cash amount exceeds $250,000? If you'd like to keep all that cash handy
in your local bank and still enjoy FDIC insurance protection, the answer is CDARS.
CDARS stands for Certificate of Deposit Account Registry Service. This service allows
you FDIC insurance up to $50 million. You just go to your local bank, sign a CDARS
agreement and then deposit your cash into a CD at a guaranteed rate.
Here is the link to the website for more information:
http://www.cdars.com
I should point out that this program is primarily for FDIC-insured banks, but credit unions
may...and I emphasize MAY...offer CDARS on a credit union-by-credit union basis.
For example, my CU (Navy Fed) doesn't offer CDARS but your local CU might. Just
stop by or call them to find out. And incidentally, credit unions are insured by the NCUA
(National Credit Union Administration) and they also raised their insurance limit to 250k.
I know the numbers discussed here might sound unrealistic to most, but given the
current financial situation some folks might elect to keep all of their holdings in cash
until the climate improves. And it's always good to know what options are available
to you in advance so you don't scamble around trying to figure out how to keep your
money safe.
I hope you find this information helpful. Enjoy the day!
CanDo
"The right attitude is everything"
@Anonymous wrote:Hello Everyone,
But what if you sold your house, sold your business, received an inheritance, etc
and the cash amount exceeds $250,000?
Put it in more than one bank?
Hey MV,
That's always an option, but if you go thru a local bank that offers
CDARS they do that for you. This way, you only go to 1 bank but
they spread your money over more than one bank within the CDARS
network. So you spread your risk but you only have one point of contact...
which is your local bank.
Example: You enter into a CDARS agreement for $400,000 at your local bank
@ 5.5% for 12 months. The first 250k goes into one CD and the remaining
150k goes into another CD within the CDARS network. But one agreement
insures the entire 400k and you only need to go to one place (your local bank)
to make this happen.
More details are available on the CDARS website, but that's a great question.
Thanks!!!
CanDo
"The right attitude is everything"
Fortunately for me, I don't have to worry about this!
@Lel wrote:Fortunately for me, I don't have to worry about this!
I doubt that many here do either!!
The reason I posted this information is because about 2-3 weeks ago
a media story was reported that the FDIC might have to ask the Treasury
for additional funding if the economy continued to deteriorate and folks
started pulling money out of their local banks for fear that it wouldn't
be protected. This led to the temporary increase in FDIC (and NCUA)
insurance protection to $250,000.
I'm the first to admit that 250k of insurance is more than adequate for
most people, but for others CDARS offers a good option so they don't
have to deposit their money all over town in several different places.
You never know what the future will bring....
CanDo
"The right attitude is everything"