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Keeping Deposits Safe When You Have Millions in Savings

Monday, April 5, 2010 - 2:08 PM
CDARS is one way you can keep large savings safe at banks. Dr. Don at Bankrate.com described CDARS and other strategies to keep large savings safe such as investing in US government securities and by having a collateralized security portfolio protecting your investment position.
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Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Monday, April 5, 2010 - 5:22 PM
CDARS sounds good, but every bank I've ever checked that offers them pays a significantly lower interest rate for CDARS CDs than for their regular CDs.  If you actually have millions to invest, that can cost you a  lot of money.

For example, Check out the Everbank CDARS rates and compare them to the Everbank regular rates.

(I was going to copy and paste the links, but you won't let me paste them here because I'm using Firefox.)

 
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AnonymousAnonymous2,282 posts since
May 9, 2010
Rep Points: 3,963
2. Monday, April 5, 2010 - 8:29 PM
That's a good point about CDARS. Rates are usually much lower. Here are those EverBank examples: Two examples of EverBank's regular CDs: 1.40% APY 1-year and 2.07% APY 3-year. Two examples of EverBank's CDARS: 0.75% APY 1-year and 1.60% APY 3-year.

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Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
3. Monday, April 5, 2010 - 8:30 PM
I do agree with comment #1.  One thought to get around the lower rates of the CEDARS program is to consider locating a large Bank Holding Company that has several subsidiary bank charters.  Deposits at these separate Banks would increase your insured deposits.  I cannot think of the name of a sample large Bank Holding Company that offers this type of Subsidiary bank charter deposit program, but have come across them periodically.  Those that do-- will usually advertise this availability to appeal to high balance depositors.  Some even offer one statement reporting for easy accounting.

Just thought of a recent Thrift Holding Company failure (really an S&L)--called FBOP, that had 9 subsidiary S&L/Bank charters.  Composed of Cal National Bank (Los Angeles), Park National Bank (Chicago), San Diego National Bank (CA), Pacific National Bank (San Francisco), North Houston Bank (TX), Madisonville State Bank (TX), Bank USA (AZ), Community Bank of Lemont (IL), and Citizens National Bank (TX).  You can see Wikipedia for a listing of the acquisition history--they bought many thrifts from 1990 forward.

OC Steve
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AnonymousAnonymous2,282 posts since
May 9, 2010
Rep Points: 3,963
4. Monday, April 5, 2010 - 9:12 PM
Emigrant Bank has multiple bank charters that allow you to spread your CDs over a group of commonly-owned banks.
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AnonymousAnonymous2,282 posts since
May 9, 2010
Rep Points: 3,963
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