- How are larger deposits insured by the FDIC?
- Who provides the additional FDIC insurance when I place deposits using CDARS?
- Who is the third party provider through which you and other network members offer the CDARS program?
- What terms are available for CDs opened through the CDARS program?
- If the CDs are actually opened at other banks, how do I know what rates they offer?
- Is there a minimum or maximum amount of money that I can invest through the CDARS program?
- Will I have to complete paperwork with every bank that holds a CDARS CD for me?
- Will I receive information from each of the banks where my CDARS CDs are placed?
- How many banks are participating in the CDARS program?
- Do the CDs opened through the CDARS program renew automatically at the end of the CD term?
- Can I get access to funds that I have invested in CDARS CDs prior to the end of the CD term?
- Can I use the CDARS program for both my personal and my business investments?
- What if a bank fails where I have an account through the CDARS program?
- How long does it take for the Federal Deposit Insurance Corporation (FDIC) to pay depositors for their insured accounts if their banks fail? I’ve heard the FDIC can take up to 99 years to pay depositors for their insured accounts.
- How can I secure my large deposits through CDARS today?
1. How are larger deposits insured by the FDIC?
The basic limit on federal deposit insurance coverage is at least $250,000 per depositor. So, you could run around to many institutions to deposit your funds to receive the same coverage you get using CDARS. Or you can place your large-dollar deposit into CDARS at VCB. We break your funds into smaller amounts and place them with other banks that are members of a special network. Then, those member banks issue CDs in amounts under $250,000. By working with one member bank, VCB, you can receive insurance from many.
2. Who provides the additional FDIC insurance when I place deposits using CDARS?
The network members that issue your CDs through CDARS provide the additional FDIC insurance coverage. Working with just one financial institution, VCB, you get coverage from many.
3. Who is the third party provider through which you and other network members offer the CDARS program?
CDARS is a service provided by Promontory Interfinancial Network, a company sanctioned by the FDIC.
4. What terms are available for CDs opened through the CDARS program?
You may choose one of six terms for the CDs included in your CDARS account. These include 4 weeks, 13 weeks, 26 weeks, 52 weeks (1 year), 104 weeks (2 years) and 156 weeks (3 years) terms.
5. If the CDs are actually opened at other banks, how do I know what rates they offer?
While the CDs are opened at other member banks participating in the CDARS program, you only need to work with one bank, VCB, to determine the one rate for the full amount you invest through CDARS. We agree on the term and the rate and then place the order through the CDARS program.
6. Is there a minimum or maximum amount of money that I can invest through the CDARS program?
Customers may invest from $100,000 to multi-million dollars in the CDARS program to access full FDIC insurance. Certain limits apply to the amount you may invest with CDARS per week in a given term.
7. Will I have to complete paperwork with every bank that holds a CDARS CD for me?
No. It’s very easy. All you'll need to do is complete and sign the VCB forms and CDARS Deposit Placement Agreement for participating in the CDARS program. We will take care of everything else.
8. Will I receive information from each of the banks where my CDARS CDs are placed?
No, to make this easy and convenient for you, you’ll receive one consolidated statement from VCB. In fact, the banks which issue your CDs will not have your name or other personal information. Only VCB and a third party service bureau that is handling the CDARS program have access to customer information. The monthly statement and 1099 statement that you receive will come from VCB and will include a listing of the banks that have issued your CDs.
9. How many banks are participating in the CDARS program?
Currently, more than 2,500 banks across the United States are participating in the CDARS program.
10. Do the CDs opened through the CDARS program renew automatically at the end of the CD term?
No, not automatically. Approximately 15 days before the end of the CD term, you will receive a notice to let you know that your CDs are about to mature. You will have the option to request that VCB reinvest the money into the CDARS program again or to have the proceeds from these CDs paid to you. Reinvestment through the CDARS program requires instruction from you to resubmit the money for deposit.
11. Can I get access to funds that I have invested in CDARS CDs prior to the end of the CD term?
While this is possible, it is highly discouraged and significant early withdrawal penalties apply. Monies should not be invested in CDARS CDs that may be needed prior to the conclusion of the CD term. Subject to credit approval, you may use CDARS deposits as collateral for a loan.
12. Can I use the CDARS program for both my personal and my business investments?
Yes. Individual savers and investors along with businesses of any size may use this service. It provides an easy and convenient way for anyone, including personal investors, business owners, non-profit organizations and trustees, to ensure that large deposits have the benefit of full FDIC insurance coverage.
13. What if a bank fails where I have an account through the CDARS program?
All banks in the CDARS network are FDIC insured. Therefore, if something happens to one of the financial institutions where a CD has been placed through CDARS, you will receive your CD balance since it is fully covered by FDIC insurance.
14. How long does it take for the Federal Deposit Insurance Corporation (FDIC) to pay depositors for their insured accounts if their banks fail? I’ve heard the FDIC can take up to 99 years to pay depositors for their insured accounts.
Historically, the FDIC pays insured deposits within a few days after a bank closes, usually by the next business day. In most cases the FDIC will provide each depositor with a new account at another insured bank. Or, if arrangements cannot be made with another institution, the FDIC will issue a check to the depositor.
It is a completely false notion that the FDIC can take up to 99 years to pay depositors for their insured account. This is a myth that many bank customers have heard from someone attempting to sell them another kind of financial product. In fact, by Federal law the FDIC is required to pay insured deposits "as soon as possible" once an insured bank fails (typically within a few days).
15. How can I secure my large deposits through CDARS today?
Call (877) VCB-5015 or use our locator to find the branch most convenient for you and to experience our outstanding customer service.
CDARS and Certificate of Deposit Account Registry Service are service marks of Promontory Interfinancial Network, LLC. Funds may be submitted for placement only after a depositor enters into an agreement with a CDARS network bank. This agreement contains important information and conditions regarding the placement of funds by a member bank.
