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IntraFi Network Deposits is a banking network that allows customers to deposit more than $250,000 and have the funds be FDIC-insured. The FDIC (or Federal Deposit Insurance Corporation) offers $250,000 of deposit insurance for most bank customers in the event that the bank fails. This applies per depositor, per institution, per ownership category.

While this may be more than enough for many people, individuals with very high net worths or businesses may have the need for additional FDIC insurance on larger sums. For those in that situation, there are an array of strategies to get the insurance coverage needed for peace of mind.

One option is to use IntraFi Network Deposits. This allows you to work with one bank which facilitates your money being spread between multiple institutions to make sure that you remain under the FDIC limit. Here, learn more about this process by diving into:

•   How does IntraFi Work?

•   What steps do you take to use IntraFi?

•   What are alternatives to IntraFi?

How Does IntraFi Work?

IntraFi Network Deposits (previously known as CDARS or ICS) is a network that links many of the largest banks and financial institutions in a shared network. If you have more than $250,000 in savings accounts or certificates of deposit in an investment plan, you might want to consider using the IntraFi network. It can help you bank your money while maintaining FDIC insurance.

You create an account with one custodial bank in the network. Think of that bank as managing your relationship with others, because they spread your total deposit amount out over multiple different financial institutions.

Your funds are split up into multiple accounts of $250,000 or less, each fully FDIC-insured, at various institutions, with IntraFi Network acting as your hub. This can be a valuable solution for high net-worth individuals as well as businesses.

Think about the big picture: Most investors want to make sure that they are investing in safe accounts; ones that are unlikely to lose value. There are, of course, various ways to accomplish this. Security is one reason you might look at how CDs compare to bonds, for example. IntraFi Network Deposits is an avenue for those who appreciate a consolidated approach to investing large sums of money and enjoying FDIC insurance.

FDIC Limits

The FDIC is an independent agency of the United States government, tasked with insuring bank depositors against a bank failure. FDIC deposit insurance guarantees that money up to $250,000 per depositor.

If you have more than that to invest, you might consider spreading out your money to different institutions. This will help make sure that all of your money is protected. You can also look into another option: Some banks participate in programs that extend the FDIC insurance to cover millions¹.

Using IntraFi Deposits

IntraFi Network Deposits can be thought of as your one-stop shop for dividing your money into separate, fully insured accounts. Read on to learn how exactly this organization functions to help make this process easier for you.

Participating Banks

The first thing that you will want to do to use IntraFi Deposits is to find a participating bank. Most of the largest banks in the country belong to the IntraFi network, including 84% of the largest banks in the country. You shouldn’t have a problem finding a network bank that will fit your needs. Check with your current bank or other ones in your area, if you like, or use a search engine to locate one. Found one you are ready to bank with? This is called your custodial bank.

Deposit Funds

Once you’ve found a participating bank, the next step is to complete the required paperwork and then deposit funds (say, by transferring money from another bank account). Even though your funds will be spread throughout several different financial institutions, you will always work directly with your custodial bank. You will deposit funds through that one bank, and they will set the interest rate that you’ll earn on all your funds across the network.

Your custodial bank will be responsible for separating your money into FDIC-insured accounts, each of $250,000 or less, and managing them.

Track Your Funds

Your custodial bank is responsible for verifying your identity, accepting your deposits, and handling all communication with you. How certificates of deposit work with IntraFi is similar to how it would work if you only had an account with one bank. You will receive regular statements from your custodial bank, just as if you had an account directly and only with them.

If you have questions about which financial institutions your money is invested in, you can track that information through your custodial bank and the bank statements they issue.

Is IntraFi Safe?

Savvy investors are concerned with which investments have the lowest level of risk. While no investment is 100% safe in all situations, the IntraFi Network has been tested with billions of dollars over its lifetime. In addition, it has been endorsed by the American Bankers Association.

How Much Does the IntraFi Service Cost?

IntraFi Network Deposits does not charge a fee directly to consumers who take advantage of the service. You will choose a product and a rate directly with the custodial bank that you elect to sign up with. That rate and product will determine your total return on investment (ROI).

How Many Banks Participate in the IntraFi Network?

Nearly all of the biggest banks in the United States participate in the IntraFi network. The IntraFi network includes more than 3,000 financial institutions, representing around 50% of the total banks in the country. Of the banks in the network, 95% are community banks, and 66% of minority-owned banks are members. This means it should be fairly simple to find a participating bank that works for you.

Alternatives to IntraFi Network Deposits

Of course, there’s the possibility that IntraFi Network Deposits doesn’t align perfectly with your needs and goals. If you have more than $250,000 in funds that you want to deposit so it’s FDIC-insured, there are other options to consider, listed here.

Open an account with a bank that offers higher insurance limits

As briefly noted above, some banks participate in programs that extend coverage to millions. This can be a convenient option for some individuals.

Open accounts with multiple banks

One alternative to using the IntraFi Network Deposits program is to just open accounts with multiple banks yourself. You would just need to keep the total amount at less than $250,000 per ownership category, per institution.

While this does give you more control, it also increases potential headaches as you try to track all of your money manually. Another possible negative is that you may not be able to get the highest rates with every financial institution. Deciding how many bank accounts to have is a personal decision, depending on your money style and your goals.

Open different types of accounts

FDIC insurance covers up to $250,000 per depositor, per FDIC-insured bank, per ownership category. One way to enjoy that FDIC coverage when you have more than $250,000 to deposit is by opening up different categories of accounts. There are a number of different types of account ownership categories, including such options as:

•   Single accounts

•   Joint accounts

•   Revocable trust accounts

•   Irrevocable trust accounts

•   Certain retirement accounts

•   Employee benefit plan accounts

Check with your financial institution to see if this might work for you as an IntraFi alternative.

Accept the risk of bank failure

You do also have the option to keep all of your money in one bank account, even above the $250,000 FDIC limit. This can involve taking on a substantial risk however. If that bank fails, you may lose any money held by the bank above the FDIC limit. This really boils down to a matter of your personal comfort level.

The Takeaway

If you have more than $250,000 in funds that you want to invest in a savings, money market, or certificate of deposit account, you may want to spread your money out to make sure that it is all FDIC-insured. FDIC insurance will cover $250,000, but beyond that, you may well need a solution. One way to do this is through the IntraFi Network Deposits program, which will divide your money into separate accounts that are fully insured. They can simplify this money management process for you and help you enjoy more peace of mind.

If you are looking for a bank that is a member of the IntraFi Network, SoFi can help. What’s more, SoFi recently announced that deposits may be insured up to $2 million through participation in the SoFi Insured Deposit Program. But even if you have much less money to stash, online banking with SoFi can also be a great choice. When you set up our Checking and Savings with direct deposit, you’ll enjoy a competitive APY and you’ll pay no account fees.

FAQ

Are IntraFi accounts safe?

While no investment can be guaranteed as 100% safe in all situations, the IntraFi Network Deposits program has been tested with thousands of depositors and billions of dollars over the years.

How do you use IntraFi?

Whether you are creating an investment plan for a child or want to invest a large amount of money for another reason, using IntraFi is very straightforward. First, find a participating bank and complete the required paperwork. Then, you will make your deposits, and your funds will be placed into CDs or deposit accounts with other banks in the network. Your custodial bank will send you periodic statements with the details of your activity.

What is the interest rate for IntraFi?

IntraFi does not set the interest rate on deposits. Instead, it is your custodial bank that sets the interest rate for the total amount deposited. Whether you have a no penalty certificate of deposit or any other type of account, the interest rate will be up to your custodial bank. You will also receive your statements and other correspondence from the bank where you made your initial deposits.

Photo credit: iStock/fizkes

¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by banks in the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at SoFi.com/banking/fdic/receivingbanks.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Countercyclical stocks tend to perform relatively well during economic downturns and underperform during periods of economic expansion. These stocks are typically associated with industries or sectors that provide essential goods or services in demand, even during periods of economic hardship. Examples of countercyclical sectors include consumer staples, utilities, and healthcare.

Countercyclical stocks can be a vital component of a well-diversified investment portfolio. As the economy experiences ups and downs, these stocks can help to provide stability and even generate profits during difficult times. Understanding countercyclical stocks and how they can benefit your portfolio is crucial for investors looking to maximize their returns and minimize risk.

How Countercyclical Stocks Work

Countercyclical stocks — sometimes called non-cyclical or defensive stocks — work by providing stability to an investment portfolio during economic downturns. Investors can use these stocks in a defensive investment strategy, as they tend to perform well even during economic hardship when other stocks are underperforming. This can help increase diversification and reduce the risk in an investment portfolio.

In contrast to countercyclical stocks, cyclical stocks tend to follow the broader economic cycle, with returns correlated to fluctuations in the market.

💡 Recommended: Cyclical vs Non-Cyclical Stocks: Investing Around Economic Cycles

Countercyclical stocks are closely related to specific industries or sectors. Industries such as consumer staples, utilities, and healthcare provide products and services considered necessities, so they tend to be less sensitive to changes in the economy. This means that even during tough times, people will still need to buy these products and services, providing a stable source of income for the companies that produce them.

For example, during a recession, people may cut back on discretionary spending, such as dining out or buying expensive clothes. However, they will still need to buy groceries, pay for utilities, and seek medical care. As a result, companies in these sectors may see stable sales and profits, which can drive up the value of their stocks even during a bear market.

It is important to note that not all stocks within a countercyclical industry will necessarily follow the countercyclical trend. Factors such as changes in government policies, technological innovations, and shifts in consumer behavior can impact the performance of these stocks.

Additionally, some countercyclical stocks may underperform during economic expansions when the demand for their products and services is lower.

It is essential to conduct thorough research and analysis before making any investment decisions, including investing in countercyclical stocks. Research may include reviewing the company’s financial performance, analyzing industry trends, and considering the political and economic environment. By taking these steps, you can identify the best countercyclical stocks to add to your portfolio and potentially generate profits even during difficult economic times.

Examples of Countercyclical Businesses

As noted above, countercyclical businesses tend to perform well during economic downturns and underperform during periods of economic expansion. Investors tend to add countercyclical stocks to their portfolios when investing with the business cycle.

Here are some examples of countercyclical industries and the types of companies that can be considered countercyclical:

•   Consumer staples, such as food, beverage, and household products, provide products and services that are considered necessities, so they tend to be less sensitive to changes in the economy. This means that even during tough times, people will still need to buy these products, providing a stable source of income for the companies that produce them. Examples of businesses in this industry include grocery stores, packaged food manufacturers, and beverage companies.

•   Utilities, such as water, electricity, and gas, provide essential services that people cannot do without. As a result, these companies tend to be less affected by changes in the economy and can even benefit from them as people continue to use these services even when they are cutting back on discretionary spending. Examples of firms in this industry include utility companies, water treatment facilities, and energy providers.

•   Healthcare companies provide medical services and products. During economic downturns, people may cut back on discretionary spending but still need to pay for medical care and other essential health services. This means that healthcare companies can provide a stable source of income even during difficult times. Examples of businesses in this industry include hospitals, pharmaceutical companies, and medical equipment manufacturers.

Risks of Countercyclical Investments

Investing in countercyclical stocks may provide stability to an investment portfolio during economic downturns, but several risks are also associated with these types of investments.

Here are some of the risks to consider:

Market Volatility

The stock market can be volatile and unpredictable, and market fluctuations can impact even countercyclical stocks. For example, during a recession, even the most stable countercyclical industries can experience a decline in demand for their products and services.

Company Specific Risks

Not all companies within a countercyclical industry will perform equally well, even during difficult economic times. It is important to conduct thorough research and fundamental analysis to identify companies with strong financials and a history of stable performance.

Dependence on Government Policies

Countercyclical industries like healthcare and utilities may depend heavily on government policies and regulations. Changes to these policies can impact the performance of these companies and the industries in which they operate.

Interest Rates

Interest rates can impact the overall stock market’s performance, including countercyclical stocks. When interest rates are low, investors may be more likely to invest in stocks, which can drive up stock prices. Conversely, when interest rates are high, investors may shift their investments to bonds or other fixed-income investments, which can drive down stock prices.

💡 Recommended: How Do Interest Rates Impact Stocks?

The Takeaway

Investing in countercyclical stocks can provide several benefits to your portfolio. These stocks can help to provide stability during tough economic times and can even generate profits — through dividends and price appreciation — when other stocks are underperforming. By diversifying your portfolio to include countercyclical stocks, you can reduce your overall risk and potentially maximize your returns.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Photo credit: iStock/Eoneren

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SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
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