Just open a Folio Institutional account—we take care of all of the details for you in the background. All cash in Folio Institutional accounts is automatically entered into the program and you will be covered from the first day you have cash in your account.
We automatically distribute your cash deposits for you across many, many different banks—each one of which insures up to $250,000 of cash deposited. By doing so your cash is spread across and deposited in many banks and each deposit in each bank is FDIC insured to $250,000. When we add more banks to our program, we increase the amount of FDIC insurance available to you automatically.
The FDIC program is a government program that operates the same in small and large banks. If any bank were to fail, your cash would still be covered by the FDIC program. There are no special steps that you would have to take, and you would be able to withdraw your cash through the normal means provided on the site.
You receive the following advantages: extended FDIC insurance in the millions of dollars per account (See Extended FDIC Insurance for current amounts), the opportunity to earn more interest on your cash balance than it may be earning at your local bank in a checking account, the ability to consolidate lower-yielding cash balance accounts into this account to qualify for a higher rate, plus our free check-writing and automated cash transfer services.
It is expected that—although we can’t guarantee it—the interest rates payable under this new IDCSA will generally be competitive with rates paid by certain banks for similar types of accounts. You may wish to compare the terms, rates of return, required minimum amounts, charges and other features of our IDCSA (both through the sweep mechanism as well as the OCDM) with other accounts and alternative investments at other brokerages. Generally our rates of return are at the low end of rates available in the marketplace and more similar to rates payable on cash in checking accounts than in higher yielding cash-based investment accounts. If cash sweep rates are material to your decision as to where to have an investment account you should compare our rates with those at other institutions and review the overall package of services and benefits we offer to those offered at such other institutions in making your decisions. See our current rates.
In addition, we aggregate—for purposes of the tiering to qualify for higher interest rates (and not for purposes of qualifying for FDIC insurance)—all accounts with the same taxpayer ID number on the account. For example, an individual account and a retirement account and a joint account with the same taxpayer ID number on each account will be aggregated for purposes of elevating funds into a higher tier. These accounts are not aggregated for FDIC insurance and so you get the benefit of the additional FDIC insurance. This aggregation applies to our sweep product (FDIC.SWEEP), not the higher yield FDIC.PLUS product.
You may be disadvantaged if your cash balance does not qualify for the higher-yielding tiers in the IDCSA, in which event you will earn less interest on your cash than you would in most money market funds.
Importantly, however, the tiering allows us to pay higher rates to higher balances thereby allowing us to be more competitive for those higher balances, while also allowing us to earn more on accounts where the cash balances are low and the cash balance is being used, for example, more like a checking account (for which many banks usually pay no interest at all). This in turn allows us to keep our membership and other fees low for our smaller accounts and continue to innovate and grow for the future.
We wish we could offer all our services for no cost to everyone—but we can’t and this offering keeps us competitive while still allowing us to offer—what we believe to be—the best brokerage platform for longer-term investors.
You should compare our rates with those offered at competing banks, brokerages, and mutual funds. You will be able to obtain higher rates elsewhere, but we believe we offer the best package of services, rates, innovative offerings and other benefits for longer term investors.
The interest applied to your cash balance will be calculated with the blended rate of the IDCSA. It is intended that a higher cash balance will qualify for a higher tier and therefore qualify for a higher blended rate, while a lower cash balance will qualify for a lower blended rate. The blended rate will be derived from the current tiers and rates then in effect. All interest rates and annual percentage yields are effective as of the date provided, and are subject to change at any time (this is a variable rate account so rates are subject to change after the account is open). The daily balance method is used to calculate interest. This method applies daily periodic rates to the collected balance in the account each day.
Yes, our FDIC.PLUS product pays a higher rate of return than our FDIC Sweep Product.
The interest paid by the Program Banks is currently tied to the Federal Funds Effective Rate Monthly Average and can be reset monthly. Most likely, the rates paid to customers will fluctuate if the Federal Funds Effective Rate Monthly Average fluctuates. The amount of any such fluctuation of rates paid to customers will be determined based on the fluctuation in the Federal Funds Effective Rate Monthly Average, competitive factors, costs to operate the Program, amounts invested in the Program, the then current tier structure, and other factors. The interest paid by the Direct Banks is set by them based on their deposit needs. Because we make money based in part on the difference between what the Program and Direct Banks pay on cash invested in the program and what customers are paid on their cash in the program, we have an incentive to decrease the rates paid to customers when the Federal Funds Effective Rate Monthly Average decreases and/or when the Direct Bank rate decreases and less of an incentive to increase such rates when the Federal Funds Effective Rate Monthly Average increases or the Direct Banks increase their rates. We may increase or decrease the rates subject to competitive pressures or other factors.
The program currently offers in the millions of dollars per account (some accounts are counted together such as if you have multiple individual accounts). (See Extended FDIC Insurance for current amounts.) FDIC covers both the principal and accrued interest in each account for any bank that fails. SIPC insurance does not apply to any amounts in bank deposits, including under the IDCSA Program.
Importantly, each account type is calculated separately (individual versus joint versus trust versus business)—so a joint account and an individual account can each have up to, for example, $1 million (for a total of $2 million) and each would be fully covered by the applicable FDIC insurance under the IDCSA. For a more detailed explanation, please consult the FDIC website (www.fdic.gov) or the FDIC, Office of Consumer Affairs, by letter (55017th Street, N.W., Washington, DC 20429), by phone (877-275-3342), or by email (firstname.lastname@example.org).
If you have a cash balance greater than the FDIC coverage in effect at any time, then that excess amount will not be insured. We will, however, place the excess amount in a single bank, or pro-rate the excess across several banks in the Program.
Deutsche Bank is one of the world’s largest banks. Read more information on Deutsche Bank by clicking here.
Deutsche Bank is the Program sponsor for the Program Banks and assists in the administration and record keeping for the entire IDCSA with respect to all banks. It also acts as the intermediary bank for the Program Banks. It is not the intermediary for the Direct Banks, and Deutsche Bank has no role in the transfer of funds to or from those banks.
We act as your agent in the Program with the Banks in the Program, both Program and Direct.
No. There are no fees for participating in the Program. However, we do make money from the Program based on the difference in the full rates paid by the Banks on cash invested in the Program and the amount that is paid to you.
All accounts that you have with us are eligible for the Program.
Any available cash you have will be swept into the IDCSA on a daily basis. If you wish to invest in the FDIC.PLUS offering, then you buy or sell that offering as if it were a stock or a fund.
No. There is no minimum balance required. Higher balances, of course, earn higher interest rates.
Yes. We, as the agent, withdraw money from the IDCSA to satisfy debts created in your brokerage accounts. (Such as when you buy stocks or write a check.)
No. We maintain only one sweep option—the IDCSA.
Current rate information can be found on our website, and the rate you actually earned is listed on your month-end statements.
There is a separate line item in the account summary that lists the balance in the IDCSA with the notation that this money is protected by FDIC insurance, but not SIPC insurance and the rate you earned. There is also a section indicating the names of the Banks to which your money was allocated as of the end of the statement period.
As ordinary income.
Yes, the client agreement reflects the IDCSA. Please refer to our website (Login page) to view the current agreement and terms and conditions.
No. You do not receive a passbook or certificate for your IDCSA. Evidence of your ownership is reflected in our books and records as the agent and, therefore, on the statement you receive.
Please see the Banks on our website.
Yes. The Banks will change as more banks are added to the Program to increase the amount of FDIC insurance. At various times a Bank can be removed from the Program as well.
Yes. You may wish to eliminate any bank with which you already have an account, if the combined total you have in that bank and with us would exceed $250,000 ($250,000 for retirement accounts). You are responsible for monitoring this list. To eliminate a specific bank, simply contact our customer service department.
Important information about when check deposits into your accounts can be used:
If you send us a check, we will deposit it into your account and notify you by email of the deposit in accordance with our then current policies, which may be changed from time to time without notice. These funds will be invested in your sweep vehicle, generally on the fourth business day after deposit, but in accordance with our then current sweep policies. While you will usually be able to make an investment in one to three business days after these funds are deposited into your account, you will generally not be able to withdraw the money from your account until your check clears, which may take up to ten business days. Consequently, we generally place at least a ten-day hold on the withdrawal of all monies deposited to an account. Foreign checks could take up to 20 days to clear.