Outsmart the $250,000 FDIC Limit with an ICS Account

By: Serge Filatov, Esq.

In light of the recent regional bank collapses, including most recently the collapse of First Republic Bank, ensuring financial security of funds held at a financial institution is crucial for businesses. Many businesses are wondering what options are available for protecting their extra cash.  IntraFi Network’s Cash Service (ICS) accounts provide a reliable solution, offering enhanced FDIC insurance coverage and competitive interest rates. In this post, we’ll explore ICS accounts and how they can help protect your business funds without sacrificing accessibility.

ICS Account Features:

  1. Expanded FDIC Insurance Coverage: ICS accounts grant businesses access to multi-million-dollar FDIC insurance coverage, exceeding the standard $250,000 limit per account holder. This makes ICS accounts particularly attractive for businesses with significant deposits seeking a secure place to store their funds.
  2. Liquidity and Flexibility: ICS accounts offer full liquidity, enabling businesses to access their funds whenever needed. They also provide flexibility in choosing between a demand deposit account (DDA) or a money market deposit account (MMDA) based on specific needs and preferences.
  3. Simplified Account Management: By consolidating accounts at a single banking institution participating in the IntraFi Network, ICS accounts streamline the account management process for businesses, saving time and reducing complexity.
  4. Competitive Interest Rates: ICS accounts often provide competitive interest rates compared to traditional savings or checking accounts, allowing businesses to earn a return on their idle cash while benefiting from expanded FDIC insurance coverage.

Factors to Consider Before Opening an ICS Account:

  1. Availability: ICS accounts are only offered by financial institutions participating in the IntraFi Network, which may limit your choice of banks and may necessitate establishing a new banking relationship.
  2. Transaction Limits: While ICS accounts provide full liquidity, there may be restrictions imposed on the number of transactions per month. Businesses with high transaction volumes should evaluate this aspect carefully.
  3. Fees: It’s essential to review the fee structure associated with ICS account services, such as account maintenance, transactions, or other related services. Weigh the costs against the benefits of expanded FDIC insurance and competitive interest rates to make an informed decision.
  4. Loan Covenants: If your business has loans with a lender, there may be covenants that restrict the use of ICS accounts. Carefully review your loan agreements to determine if any restrictions apply or reach out to legal counsel to review your documents for you.

IntraFi Cash Service (ICS) accounts offer a compelling combination of expanded FDIC insurance coverage, liquidity, and competitive interest rates, making them an attractive option for many businesses. However, it’s essential to evaluate the factors mentioned above and determine if an ICS account aligns with your business’s financial needs and goals. If you’re considering opening an ICS account, it may be beneficial to consult with your legal counsel to help you make an informed decision.

This blog is written as of May 2, 2023. Recommendations and legal requirements are changing rapidly, so please continue to review our legal updates or review postings on relevant government websites.

All blogs on this site are for educational purposes only, do not constitute legal advice or opinion, and should not be applied to your situation, or any specific situation, without consultation with counsel. Strategy Law, LLP does not provide any legal advice concerning any matter discussed in a blog except upon formal engagement including, without limitation, execution of Strategy Law, LLP’s formal legal services agreement, and with respect to specific factual situations.  No blog constitutes a guaranty, warranty, or prediction regarding the result of any legal matter discussed in the blog or any representation.