How to protect business deposits that exceed FDIC limits with ICS and CDARS

Gain FDIC protection for balances above 250K through ICS and CDARS

If your business is growing and your deposits now exceed $250,000, congratulations. Your hard work has paid off. Your success also means it’s time to protect those assets with the next level of business money management: ICS® (Insured Cash Sweep®) and CDARS® (Certificate of Deposit Account Registry Service®).  

With ANB acting as the administrator, these services provide your business with FDIC insurance for large sums (in the millions) by distributing your funds across a network of banks, in amounts that qualify for coverage. ICS and CDARS deposits can also be placed into interest-earning accounts, so your funds are always working for you. If you’ve been using multiple bank accounts for security, and managing them on your own, it’s time to make the switch. 

The differences between ICS and CDARS

Both ICS and CDARS are services from IntraFi®, a financial solutions company with more than 3,000 participating banks participating. IntraFi’s services have been tested and proven since their launch in the early 2000s and are now an integral part of business banking.   

While ICS and CDARS offer similar protections, each can appeal to different business needs. With ICS, automation plays a big role in asset protection, and amounts above FDIC coverage are automatically reallocated (“swept”) into other accounts. ICS also offers two account types with different liquidity and earning options: ICS Demand, which uses demand deposit accounts (checking accounts), and ICS Savings, which uses money market deposit accounts.  

In contrast, CDARS uses CDs to protect funds across IntraFi’s network. CDs offer fixed terms (52 weeks or 2 years), so there’s less liquidity, but your funds have the potential for greater growth with high-earning rates. Businesses that are looking to earn more from their deposits often use CDARS. 

ICS and CDARS interest rates are set by your bank

To simplify the potential complexity of a network of separate banks offering unique rates for individual accounts, interest rates are set and offered by your bank. Regardless of where funds are placed in the IntraFi network, the type of account you use will always earn the rate offered by your bank.

Receive streamlined account management

While your ICS and CDARS funds work across numerous banks, your experience will stay simple. Your bank of choice handles account management, tracking and reconciling reports from different institutions. With your bank doing the heavy lifting, you’ll receive consolidated reporting that saves you time.  

Use ICS and CDARS for as long as needed 

These services are designed for long-term flexibility, so your business can continue using them for as long as they fit your cash management strategy. ICS accounts can remain open with funds moving in and out as needed, while CDARS placements can be renewed continuously as each term matures.

Important considerations for ICS and CDARS

While ICS and CDARS offer powerful ways to protect and grow your business deposits, there are a few important details to keep in mind: 

• Deposit limits: Although these programs can insure multimillion-dollar balances, there are maximum deposit limits. At ANB, we offer coverage of up to $190 million with ICS Damand, $140 million with ICS Savings and up to $50 million for CDARS. The maximum amount for all products is $275 million.  

• Withdrawal frequency: ICS Demand accounts offer the highest liquidity with unlimited program withdrawals each month. ICS Savings withdrawals are set by each bank, but the average is up to six withdrawals per month. CDARS uses certificates of deposit, which typically require you to keep funds on deposit until maturity; early withdrawals may result in penalties or loss of interest. 

• Terms and agreements: All ICS and CDARS placements are subject to the terms and conditions set by your bank and the IntraFi network. Review these agreements carefully and ask your banker any questions you may have to ensure these solutions meet your business needs. 

By understanding these considerations, you can make the most of ICS and CDARS while keeping your funds protected and accessible. 

Protect your deposits with American National Bank

American National Bank works with businesses of all sizes across Nebraska, Iowa, and Minnesota. Whether your priority is liquidity, interest growth or a mix of both, we’ll help you find the right solution.