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FDIC and other 4-letter words that can save your cash deposits

The recent developments with Silicon Valley Bank (SVB) have sent reverberations throughout the banking industry as well as the overall economy. We have been always told that cash is the safest investment. But if not handled properly, you can experience a financial disruption or worse -  losses. There some things that you can do to “de-risk” your cash and cash equivalents.

  1. FDIC - know your Federal Deposit Insurance Corporation (FDIC) limits. As of the time of writing, it is limited to $250,000 per account holder, per FDIC insured bank, per type of account. The type of account are things like, but not limited to, single, joint, and corporate/partnership, or unincorporated association account. For more information, check out “Are My Deposit Accounts Insured by the FDIC” here: https://www.fdic.gov/resources/deposit-insurance/financial-products-insured/

  2. CDAR – is an service offered by banks whereby you can make a deposit > $250,000  at 1 bank and still receive full FDIC coverage. CDAR uses a proprietary system to place your deposit across a number of FDIC covered banks. By placing less than $250,000 across a number of bank, you can have the entire portfolio fall under FDIC coverage.

  3. Bills –  US Treasury Bills are debt instruments that are backed by the full faith and credit of the US government. In finance parlance, a 90 day T-Bill is considered to be the “risk-free” rate of return as the US treasury market is the deepest and most liquid market in the world.  T-Bills maturities range from 1 day to 1 year and everything in between. Rates are now very compelling due to the rise in all interest rates in 2022.

In short, there are strategies that you may be able to employ to protect your cash and bank accounts. Elevation works with a number of individual and institutional clients to help better manage their savings and working capital. We can help you to better understand different options and put together a plan that is appropriate based upon cash uses and liquidity profile.

Amit Thakkar