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Old 04-08-2007, 10:45 PM
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Default Talent agent surety bond

I hate to pay out $500/year for a surety bond when I'm working with just friends and family. I have $50,000 deposited at my bank. Is there a way I can post the money to meet the requirements of a $50,000 surety bond for licensing?(...sort-of posting my own bond.) Does anyone know?
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Old 04-09-2007, 09:42 AM
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You usually can in the form of a letter of credit. However, if you take a look at a letter of credit vs. a surety bond, you will realize both options have a cost, and the bond is usually cheaper.

A letter of credit (ILOC) typically requires a 1% annual fee, $250 in this case. The letter of credit also freezes up the $50K, that you would otherwise have as liquid cash. Currently, Capital One money market accounts are offering 5% interest. This means, the true cost of the ILOC is 6% or $1,500 annually.

Your best bet is to pay the $500 bond premium, and invest the $50K. The interest earned on the investment will pay for the bond 2.5 times over.


Let me know if you have any further questions.
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