Investing in certificate of deposit

REST INSURED: With FDIC insurance limited to $100,000 per account, investing a larger sum of money in CDs has always meant opening multiple accounts at different banks or going uninsured. But not anymore. The Certificate of Deposit Account Registry Service (CDARS), launched in January 2003, offers investors a way to stash up to 55 million in fully FDIC-insured CDs without opening 50 separate accounts.

CDARS is basically a swapping service that lets banks trade CDs, divvying up your money into multiple CDs, each of which is less than $100,000 and fully FDIC-insure. "For investors, it's extremely simple--no different than buying a single CD from a bank," explains Mark Jacobsen, president and COO of Promontory Interfinancial Network LLC, which runs CDARS. "But it's not invisible. Investors are informed about where their money is and have the option of specifying any banks where they don't want the money to go."

Beyond the security FDIC insurance offers, CDARS holders also benefit from greater convenience and more clout when it comes to other banking matters--such as a business line of credit. "It means you can do a lot more business with one bank, which is easier and also makes you a more valuable customer to that institution," notes Jacobsen. To find banks offering CDARS, visit www.cdars.com.--J.P.