By Chris Barron, Vice President, Relationship Banker
Q. The top four banks have an implied federal guarantee on their deposits. Why put your deposits above the FDIC-insured limit in any other bank?
A. Every depositor needs to make this decision for themselves, as there’s an intrinsic risk associated with uninsured deposits. With that said, keeping promises at a community bank, even over the standard FDIC coverage of $250,000, ensures that your deposits stay within the local economy and help fund the growth of small local businesses. When you deposit money at a community bank, those deposits are the fuel that supports loan requests that allow your neighbors to grow their American dream!
Some community banks, like Summit Bank, offer ICS/CDARS account options to insure deposits over the standard FDIC coverage. ICS (Insured Cash Sweep) and CDARS (Certificate of Deposit Account Registry Service) are banking services that help clients maintain full FDIC insurance coverage on large deposits.
Some community banks, like Summit Bank, offer ICS/CDARS account options to insure deposits over the standard FDIC coverage. ICS (Insured Cash Sweep) and CDARS (Certificate of Deposit Account Registry Service) are banking services that help clients maintain full FDIC insurance coverage on large deposits.
Insurance Cash Sweep (ICS) allows depositors to have funds exceeding the FDIC insurance limit placed into interest-bearing deposit accounts at multiple FDIC-insured institutions. When a customer places funds through ICS, the money spreads across numerous banks in amounts below the $250,000 FDIC insurance limit. For the customer, it appears they have a single account at their primary bank. Still, the funds are divided and distributed in the background among several other banks participating in the ICS network.
Certificate of Deposit Account Registry Service (CDARS) is a similar service to ICS but designed explicitly for certificates of deposit. (CDs). When a customer places a large amount of money into a CD, the bank can use the CDARS network to spread the funds across multiple banks in amounts below the FDIC insurance limit.
ICS and CDARS benefit individuals and businesses with large cash balances and want to maximize FDIC insurance protection. Utilizing these tools gives you the peace of mind you want while supporting your local economy.