by KYW's Salil Gutt
There is a unique service for bank CDs that is getting a lot of traction. Its name is a mouthful - Certificate of Deposit Account Registry Service, CDARS for short.
CDARS is a clearing house for small and midsized banks. This service generally makes sense for investors who have significant amounts to invest in CDs and do not want to spend time running around among various banks opening accounts. Such investor can also buy CDs through their brokerage accounts but brokered CDs have one disadvantage. If a bank fails you get your principal back but may lose some interest income.
The way CDARS works is to go a bank that participates in the program and sign a deposit placement agreement with that bank. You can scan a list of available banks and reject those you don't want.
Each bank charges a different set of rates so you should shop around for the best originating bank. The website is CDARS.com for a full listing.
One downside of CDARS, the rates you get are slightly lower than you would get by shopping around but convenience is the goal of this service.
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