Safe-Guarding Your Money: Is FDIC Insurance Enough?

by: Kim Parks

Making your deposits at banks insured by the Federal Deposit Insurance Corporation (FDIC) has given depositors a sense of peace for over eighty years.

But the FDIC insurance limit is for deposits up to $250,000. Some depositors and businesses exceed this level, and that can present a serious problem.

One way around this is to spread your deposits around different banks. However, this often requires making extensive phone calls, signing stacks of signature cards, and providing information about the business and the authorized signers on the accounts to every bank.  Each bank seems to have a different set of hoops to jump through, and once the depositor has safely landed on the other side of a new account opening, the real confusion begins.

Some new problems can crop up.  Which bank allows which transactions?   What is the procedure to change signers? Why does it differ from bank to bank?  And on and on.

Insured Cash Sweep (ICS)

A better answer is Insured Cash Sweep service, or ICS. This makes it possible for depositors to have multi-millions of dollars in accounts at one participating bank while still being completely insured by the FDIC.

“This is a huge convenience for customers.  They are able to deposit their money in one bank and not have to worry about whether it’s insured or not,” said Josh Keifer, VP Commercial Lending, Armstrong Bank.

This ICS service is offered by the Promontory Interfinancial Network. It has received an exclusive endorsement from the American Bankers Association through its subsidiary, the Corporation for American Banking.  ICS has been thoroughly tested (with many billions of dollars) and has been designed so as to comply with every relevant FDIC requirement. The FDIC not only acknowledges the use of ICS services to expand deposit insurance coverage but also describes how it works (see

In addition, public entities that have extra regulations concerning FDIC coverage are also able to use ICS.  Arkansas and Oklahoma, along with numerous other states, have laws specifically allowing for the use of ICS for public entities. The ICS service can greatly reduce the amount of time needed for the ongoing collateral-tracking requirements.

Insured Cash Sweep has been thoroughly tested, and reciprocal deposit placement services are recognized both in the FDIC regulations and in state statutes and regulations throughout the United States. ICS is both safe and convenient, and participating financial institutions are informed and capable of performing ICS services.

FAQ: More info re FDIC and ICS

  • What happens if my deposit balance exceeds $250,000 at my local bank?You simply make your deposit at your financial institution that is a member of the ICS network.  Then, the funds are placed with other financial institutions through the ICS network.  Placements are made for amounts under $250,000 so principal and interest are eligible for FDIC insurance.  You only deal with one financial institution.  Then, you will receive a monthly statement showing where your funds have been placed, your interest earned, and any sweep activity that has taken place.
  • Is there a lot of paperwork for me to sign?You will have the normal amount of new account documentation to deal with in the beginning.  In addition, you will sign an ICS Deposit Placement Agreement and a custodial agreement with a member of the ICS network (your financial institution).
  • Do all banks offer this service?No.  You may find participating financial institutions by visiting and navigating to the “Find ICS” page.
  • Will the banks where my money is placed know my business?No.  Your confidential information remains protected and your relationship remains between you and your financial institution.
  • How will I know where my money actually is and my balances at each financial institution?You can check balances at any time by using an online tool specially developed for Insured Cash Sweep.  Names of ICS network members where your funds have been placed will be included.
  • Who sets my interest rates, and how am I paid interest?Your financial institution will set your interest rate.  You will receive consolidated interest payments and statements for each service option through your financial institution.
  • What if I need funds swept back into my account at my local bank?It’s as simple as contacting your financial institution.  Everything else is handled for you.


    Kim Parks has worked in the banking industry for the past 20 years. She spent 8 years at Benefit Bank before transitioning to Armstrong Bank. Her years in Ft. Smith include loan processing the new accounts and IRA specialist. She currently serves as the Business Development Banker for Armstrong’s Fort Smith region.