Ever heard of NCUA insurance? Learn how your deposits are credit unions are protected up to $250,000 (2024)

You may not have given much thought to the financial security of your bank, but recent high-profile bank closures have brought this serious issue to light.

You likely know that the Federal Deposit Insurance Corporation (FDIC) insures bank deposits, but what if you use a credit union? Don’t worry—your money is still insured by the National Credit Union Administration (NCUA), an independent federal agency regulating credit unions. And the best news is that FDIC and NCUA insurance protect your hard-earned cash the same way and up to the same limits.

What is NCUA insurance?

The NCUA is a federal agency that insures credit union deposits and protects members. The organization also enforces regulations impacting approximately 4,700 federally insured credit unions in the U.S.

NCUA insurance backs all deposit accounts at credit unions. The National Credit Union Share Insurance Fund (NCUSIF) is the actual name of the insurance program for member deposits in federally insured credit unions, but it’s commonly referred to as NCUA insurance. NCUA insurance means that deposit accounts at credit unions are backed by the full faith and credit of the U.S. government up to established limits.

“Nobody’s ever lost any money or deposit at a federally insured credit union,” said Mike Schenk, chief economist at the Credit Union National Association (CUNA).

How does NCUA insurance work?

NCUA insurance applies if a federally insured credit union fails. And you don’t need to sign up for protection or purchase coverage. Instead, funds on deposit in qualifying accounts are automatically insured.

NCUA insurance applies to a variety of savings and deposit accounts, including:

  • Savings accounts
  • Checking accounts
  • Money market accounts
  • Certificates of deposit (CDs)
  • Traditional or Roth IRAs

It’s important to note that the NCUSIF doesn’t cover money invested in mutual funds, stocks, bonds, life insurance or annuities, even if you opened them with a credit union.

NCUA insurance limits

NCUA provides at least $250,000 in total coverage for all members of federally insured credit unions. The $250,000 limit applies per depositor and per account type and ownership category. For instance, if you have an individual savings account with $250,000 plus a joint checking account with a $250,000 balance, you’re fully insured for both as they’re different ownership categories (individual vs. joint).

Other credit union account types eligible for NCUA insurance include trusts and certain retirement accounts holding deposit products like IRA share certificates and IRA savings accounts.

Ownership categoryIncluded account typesCoverage limit
Individual accountsChecking, savings, money market accounts in one person’s name$250,000
Joint accountsChecking, savings, money market accounts in two people’s names$250,000
Trust accountsFormal or informal revocable trusts$250,000
Retirement accountsTraditional IRA, Roth IRA, Keogh Plan/HR 10$250,000
Individual accounts
Included account typesChecking, savings, money market accounts in one person’s name
Coverage limit$250,000
Joint accounts
Included account typesChecking, savings, money market accounts in two people’s names
Coverage limit$250,000
Trust accounts
Included account typesFormal or informal revocable trusts
Coverage limit$250,000
Retirement accounts
Included account typesTraditional IRA, Roth IRA, Keogh Plan/HR 10
Coverage limit$250,000

If you have multiple accounts in several categories with the same credit union, your total coverage limit may be higher.

For example, let’s say you had the following accounts:

  • $50,000 in an individual savings account
  • $25,000 in a joint money market account
  • $265,000 in an individual Roth IRA
  • $25,000 in a trust account

In total, you have $365,000 deposited with the credit union. Because you have accounts in different ownership categories, you have more than $250,000 in total coverage. You’re fully insured for the savings, joint money market, and trust account; all three are separate ownership categories and have balances under the $250,000 limit. However, you’re only insured for $250,000 of your $265,000 IRA balance, leaving $15,000 uninsured.

So you don’t run afoul of NCUA insurance limits, be sure to use the Share Insurance Estimator tool from MyCreditUnion.gov to calculate limits for each account. If you have individual account balances of more than $250,000, consider spreading your money across multiple credit unions to ensure you’re fully insured.

NCUA vs. FDIC

The NCUA and FDIC are very similar; they provide government-backed deposit account insurance. While the NCUA applies to federally insured credit unions, the FDIC insures bank deposits.

“The NCUA is federal insurance for credit union members that offers the same safety and security that the FDIC offers to consumers,” said Samantha Beeler, president of the League of Southeastern Credit Unions.

As with the NCUA, the FDIC insures deposits per account holder and ownership category up to a maximum of $250,000. The FDIC covers the same accounts as the NCUA, including savings, checking, certificate and retirement accounts.

One of the only differences between NCUA and FDIC coverage is that the FDIC will also insure cashier’s checks and money orders. Otherwise, banks and credit unions are equally protected, and your deposit accounts are safe with either option.

Something interesting to note is that credit unions insure a higher percentage of their deposits than banks do; approximately 90% of credit union deposits are insured. Does that mean that credit unions are safer than banks? Not necessarily; according to Beeler, the discrepancy comes down to the audiences that credit unions serve.

“[Credit unions] have a lot more consumer accounts than our banking counterparts who concentrate a lot on serving commercial parts of the community,” she said.

The takeaway

If you were thinking of opening an account with a credit union but were worried about how safe your money would be, you can rest assured that federally insured credit unions are just as safe as FDIC-insured banks. And if you’re considering taking out a personal loan or opening a new savings account, keep credit unions in mind.

“My best piece of advice would be whenever you’re looking for any financial product or service, whether it’s a deposit account or a loan, be sure to shop around number one and ask questions,” said Schenk. “And then always, always include a credit union in those shopping plans because the pricing is just so much more consumer-friendly, and more than likely, people will save a lot of money by doing that.”

Ever heard of NCUA insurance? Learn how your deposits are credit unions are protected up to $250,000 (2024)

FAQs

Ever heard of NCUA insurance? Learn how your deposits are credit unions are protected up to $250,000? ›

All deposits at federally insured credit unions are protected by the National Credit Union Share Insurance Fund

National Credit Union Share Insurance Fund
The National Credit Union Share Insurance Fund was created by Congress in 1970 to insure members' deposits in federally insured credit unions. Each credit union member has at least $250,000 in total coverage. Administered by the NCUA, the Share Insurance Fund insures individual accounts up to $250,000.
https://ncua.gov › support-services › share-insurance-fund
, with deposits insured up to at least $250,000 per individual depositor. Credit union members have never lost a penny of insured savings at a federally insured credit union.

Does the NCUA provide insurance for credit union depositors up to $250000? ›

The NCUSIF provides all members of federally insured credit unions with $250,000 in coverage for their single ownership accounts. These accounts include regular shares, share drafts (similar to checking), money market accounts, and share certificates.

What does it mean that your money is FDIC NCUA insured up to $250000? ›

The Share Insurance Fund also separately protects IRA and KEOGH retirement accounts up to $250,000. The fund is administered by the NCUA and is backed by the full faith and credit of the United States. No one has lost a single penny of insured deposits at a federally insured credit union.

What is the maximum amount insured by NCUA? ›

The NCUA insures up to $250,000 per depositor, per institution, per ownership category. “Ownership category” refers to account type, usually single or joint. If you have a single and a joint account at the same institution, both are insured up to the $250,000 limit.

What happens if you have more than 250k in the bank? ›

The FDIC insures up to $250,000 per account holder, insured bank and ownership category in the event of bank failure. If you have more than $250,000 in the bank, or you're approaching that amount, you may want to structure your accounts to make sure your funds are covered.

How long does NCUA have to pay you back? ›

If the member shares are not assumed by another credit union, all verified member shares are typically paid within five days of a credit union's closure. No member of a federally insured credit union has ever lost a penny in insured accounts.

How to maximize NCUA insurance? ›

By structuring your deposits using different ownership assignments such as single ownership, joint ownership, and revocable family trusts, you can maximize your NCUA insurance coverage.

Where do millionaires keep their money if banks only insure 250k? ›

Millionaires can insure their money by depositing funds in FDIC-insured accounts, NCUA-insured accounts, through IntraFi Network Deposits, or through cash management accounts. They may also allocate some of their cash to low-risk investments, such as Treasury securities or government bonds.

Are credit unions safe if banks collapse? ›

If the bank fails, you'll get your money back. Nearly all banks are FDIC insured. You can look for the FDIC logo at bank teller windows or on the entrance to your bank branch. Credit unions are insured by the National Credit Union Administration.

Which is safer, FDIC or NCUA? ›

One of the only differences between NCUA and FDIC coverage is that the FDIC will also insure cashier's checks and money orders. Otherwise, banks and credit unions are equally protected, and your deposit accounts are safe with either option.

Is your money safe in a credit union? ›

Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.

Who are the top 5 credit unions? ›

  • No. 1 — Navy Federal Credit Union.
  • No. 2 — State Employees' Credit Union.
  • No. 3 — Pentagon Federal Credit Union.
  • No. 4 — Boeing Employees' Credit Union.
  • No. 5 — SchoolsFirst Federal Credit Union.
  • No. 6 — Golden 1 Credit Union.
  • No. 7 — America First Credit Union.
  • No. 8 — Alliant Credit Union.
May 14, 2024

Are CDs covered by NCUA? ›

Accounts insured in NCUA-insured institutions are savings, share drafts (checking), money markets, share certificates (CDs), Individual Retirement Accounts (IRA), and Revocable Trust Accounts. The maximum dollar amount that is insured in an NCUA institution is $250,000 per institution.

Where is the safest place to deposit large sum of money? ›

Certificates of deposit issued by banks and credit unions are also insured for up to $250,000, guaranteeing your deposit and any interest returns you earn. Money market accounts are worth considering as well; they're FDIC-insured, and combine features of checking and savings accounts.

Where do millionaires bank? ›

JP Morgan Private Bank

“J.P. Morgan Private Bank is the more elite program serving ultra-high-net-worth individuals,” Naghibi said. “It offers comprehensive services in savings, checking and retirement account management. But, more than anything, it gives clients access to their bank and team with a concierge feel.”

How much money is too much to keep in one bank? ›

How much is too much cash in savings? An amount exceeding $250,000 could be considered too much cash to have in a savings account. That's because $250,000 is the limit for standard deposit insurance coverage per depositor, per FDIC-insured bank, per ownership category.

Does the FDIC insure credit union accounts up to $250000? ›

The standard maximum deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The FDIC insures deposits that a person holds in one insured bank separately from any deposits that the person owns in another separately chartered insured bank.

Are joint accounts FDIC insured to $500,000? ›

If a couple has a joint money market deposit account, a joint savings account, and a joint CD at the same insured bank, each co-owner's shares of the three accounts are added together and insured up to $250,000 per owner, providing up to $500,000 in coverage for the couple's joint accounts.

Is my money safe in a credit union? ›

Which is Safer, a Bank or a Credit Union? As long as you are banking at a federally insured institution, whether it is a credit union insured by the NCUA or a bank by the FDIC, your money is equally safe. Credit unions are owned by the members—your savings account at a credit union is a share of ownership.

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