I have $30,000 to invest in money-market certificates of deposit. Is there any advantage to putting all the cash in one certificate at one bank, spreading banks in widely separated parts of the country?
One account in a bank or savings-and- loan insured by the FDIC or FSLIC will protect up to $100,000. There is no advantage in spreading your cash around as long as all of the banks pay the maxiumum permitted by Regulation Q -- as most banks are currently doing. As long as banks of S&Ls fail only occasionally, either insuring corporation appears able to pay off depositors in full or to arrange for a takeover to pay within about 10 days. Only in the case of a cataclysmic credit collapse or failure of the banking system would payoff not be likely. In such an extreme case, spreading your $10,000 to three local or three widely sperated banks would probably not shield you from a loss.
At present, I suggest keeping your cash in one place -- but keept an eye out for differrences in inter ests rates in the future.