Is your money safe in a credit union?

The Federal Deposit Insurance Corporation federally insures most traditional banks in the event of default. But credit unions are not considered traditional banks. Is a credit union FDIC insured?

Although credit unions offer the same financial products and services as traditional banks, a big difference between credit unions and banks is who insures their money. Even though credit unions are not FDIC insured, they are still federally insured.

For those who are current members of a credit union or considering joining a credit union, here are some things to know about protecting money deposited in a credit union.

Are credit unions FDIC insured?

Although federal credit unions are not insured by the FDIC, they are federally insured by the National Credit Union Share Insurance Fund. NCUSIF is overseen by the National Credit Union Agency, an independent federal agency established in 1970. NCUSIF has the full support of the US government in the event of an insured credit union’s failure.

According to the NCUA, no credit union member has lost money in federally insured accounts at a credit union. This is proof that money deposited in an NCUA-insured credit union account is just as safe as in an FDIC-insured bank account.

Which credit unions are insured by NCUA?

Those interested in joining a credit union should be aware that not all credit unions are NCUA insured. Some state-chartered credit unions carry private deposit insurance rather than NCUA insurance.

While the private deposit insurance of these state-chartered institutions can protect account holders’ money, having NCUSIF-backed accounts could make some credit union members more confident about the safety of their money.

So how do you determine if a credit union is NCUA insured? All NCUSIF-protected credit unions must display the official NCUA logo wherever an account can be opened, such as physical branches and their websites.

Is the NCUA as safe as the FDIC?

The NCUA and FDIC provide the same amount of coverage for deposit accounts. Both offer standard deposit insurance of $250,000 per individual depositor, per insured institution.

An account holder’s money in a deposit account is no more or less safe in a credit union than in a bank.

What types of accounts are insured by the NCUA and for how much?

The NCUA insures stock accounts — called deposit accounts at banks — such as checking, savings, certificates, and money market accounts. Accounts such as IRAs and trusts are also insured by the NCUA, as they are also considered stock accounts.

NCUSIF does not cover brokerage accounts, insurance products, or the contents of safe deposit boxes, as these are not stock accounts.

The NCUA offers standard deposit insurance of $250,000 per individual depositor, per insured credit union. Suppose an individual has deposited $250,000 in one credit union and $100,000 in another. All their money would be protected by NCUSIF. If that same person has $350,000 in stock accounts at a credit union, their $350,000 would only be insured up to $250,000.

Credit union members with equity accounts in multiple ownership groups will receive up to $250,000 in coverage for each ownership group. NCUSIF insures the following property groups up to $250,000 each:

  • Individual owner accounts
  • Joint accounts
  • Traditional IRAs, Roth IRAs, and Keogh Accounts
  • Revocable trust accounts
  • Irrevocable trust accounts

Say someone has an individual account of $50,000, a joint account of $200,000, and a Roth IRA of $250,000. All of these accounts would be covered up to $250,000 each if they were deposited at the same credit union.

If that same person increases the individual account to $300,000, it will only be insured up to $250,000. This is why it is essential to understand what is covered by NCUSIF and how much.

Some NCUA-insured credit unions also purchase private insurance to provide customers with higher coverage limits than the standard $250,000, which can benefit those who want to keep more money in a credit union.

The NCUA has a share estimator tool that credit union members can use to determine if their current share accounts are adequately covered.

What types of accounts are not insured by the NCUA?

The NCUA does not insure most unshared accounts. For example, brokerage accounts would not be insured.

To protect their money, an account holder at a credit union or bank should know which accounts are and are not insured. They should also understand how multiple deposit accounts at the same institution are insured.

Carry

Are credit unions FDIC insured? No, they are not, but they receive the same NCUA protection as FDIC banks. Credit union and bank customers need to know which accounts are insured and for how much to best protect their money.

Credit union members concerned about their NCUA coverage should use the NCUA Estimator Tool to determine if their deposits are fully insured. Account holders whose deposits exceed NCUA coverage limits must transfer money to another federally insured financial institution to ensure full coverage.

FAQs

Here are answers to some common questions about credit union security.

  • Is your money safe in a credit union?
    • The NCUA federally insures all federal credit unions. The NCUA also insures some state-chartered credit unions, while others may be covered by private deposit insurance. According to the NCUA, no credit union member has ever lost money on a federally insured account at a credit union.
  • What are the disadvantages of credit unions?
    • The biggest drawback for credit unions is the membership requirements. Every credit union must have a membership defined in accordance with the Federal Credit Union Act of 1934. Therefore, not everyone is eligible to join every credit union.
    • Also, since many credit unions are small, some may not offer the variety of product options available at traditional banks.
  • How much of your money is insured in a credit union?
    • The NCUA provides standard deposit insurance of $250,000 per individual depositor, per insured credit union for each account ownership group.
    • Thus, an account holder would be insured for more than $250,000 per insured institution when they have deposit accounts in multiple ownership groups, such as in individual deposit accounts and an IRA.

Our in-house research team and on-site financial experts work together to create accurate, unbiased and up-to-date content. We check every stat, quote and fact using trusted primary resources to ensure that the information we provide is correct. You can read more about GOBankingRates processes and standards in our Editorial Policy.

About the Author

Andrea Norris has worked in the web publishing industry for 15 years, both as a content contributor and editor specializing in topics related to personal finance, frugal living, home and automotive . She writes short and long content and is well trained in SEO keyword research and writing.

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