You read the title right. When you’re a high roller, the $250,000 limit of FDIC insurance just isn’t going to cut it. Let me show you how you can get $50 million. It’s all about rocking the CDARS.

Right now, your funds at an FDIC insured bank are insured up to $250,000. If the bank fails, your funds are protected under the Federal Depository Insurance Corporation up to $250,000. There are circumstances where your coverage could higher (it’s $500,000 if it’s a joint account) but the rule of thumb is that each account at each bank is covered up to $250,000.

What if you have more? The easiest way is to open up a new account at every local bank and depositing $250,000 into each. If you don’t mind all the paperwork, go right ahead. If you don’t want to deal with all the hassle, consider participating in the CDARS program. CDARS stands for Certificate of Deposit Account Registry Service and handles the paperwork and hassle of opening accounts at multiple banks to take advantage of the $250,000 protection limit.

How much does it cost? 0.15% is shaved off the interest rate of each of the CDs they use and used to pay for this service. So if you opted to put your funds into a dozen CDs yielding 2.00%, then CDARS would set it up for you, taking 0.15%, and leaving you with a yield of 1.85%. While 0.15% sounds expensive, your real cost is less than that because your earnings would’ve been taxed. Either way, it’s easier to have them do it.

How do you get in on CDARS? Simply go to a bank that participates and ask them to help you sign up. There are about 3,000 financial institutions participating in CDARS so you’ll likely find one near you. You can use their CDARS locator to find one near you.

Now the hard part is remembering where I put that $50 million.

Jim writes regularly about personal finance at Bargaineering.com.

(Photo: goldenpeacock)

Commenter Mr.Compliance addss:

First, the FDIC limits of $250K are only good until the end of this year. Jan 1 2010 they go back to $100K, so make sure they’re short term CDs.

Second, the CDARS product is not offered by a bank, they are offered by an LLC that keeps track of your holdings for you (a custodian of the holdings). This LLC is not a bank and is not FDIC insured.

Third, these CDs are likely called brokered deposits, which have higher rates than the bank up the road. These products have come under fire as of late because of the cost to financial institutions.

Lastly, you still need to track your CDARs portfolio your other bank accounts – checking, savings, other CD accounts, etc… Depending on the account registration, with CDARS you could be over the FDIC limit if you hold a CD within the portfolio when you take into account ALL your holdings at that financial institution. Make sure you know how the FDIC insurance limits apply to all your accounts.

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