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When you open an account at a financial institution, you want to ensure that your money will be safe, regardless of current or future circumstances. The Federal Deposit Insurance Corporation, or FDIC, will protect your money if a bank shuts down. NCUA insurance is the equivalent for credit unions.
On a credit union's building and website, you may see that it is 'federally insured by the NCUA.' This lets you know that money in your account is protected by the government, up to certain limits. The NCUA is a government agency that oversees federal credit unions.
The NCUA controls the National Credit Union Share Insurance Fund, or NCUSIF, which insures accounts at participating federal credit unions and is backed by the government. According to the NCUA, the NCUSIF insures about 98% of all credit unions in the US.
NCUA insurance is the credit union equivalent of FDIC insurance, which protects bank deposits. Both offer coverage for savings, checking, certificates of deposit (CDs) or share deposits, and money market accounts. FDIC also covers cashier's checks and money orders, while NCUA offers coverage for some types of retirement accounts.
Many deposits are federally insured by the NCUA. Here's a complete list of types of account covered by the NCUA:
- Savings accounts
- Checking accounts
- Certificates of deposit (CDs) or share deposits
- Money market accounts
Keep in mind that while IRAs are covered, the NCUA does not insure brokerage accounts. Money that's invested in stocks, bonds, or mutual funds isn't secure even if these products are directly from a federally insured credit union.
A credit union has to tell its members if a specific product isn't federally insured, so you'll know what is guaranteed by the credit union and what isn't. Individual credit union accounts are insured up to $250,000. Joint accounts are insured for up to $250,000 per owner, with a maximum of $500,000.
It's possible to have more than $250,000 in NCUA insurance at one credit union if the accounts are in separate ownership categories. Ownership categories are split into the following groups:
- Individual accounts
- Joint accounts
- Retirement accounts
- Trust accounts
For example, say you have $250,000 in an individual account and another $350,000 in a joint account. If your credit union shut down, all $600,000 in deposits would be federally insured.
Quick tip: You can also use the NCUA's Share Insurance Estimator if you want to know how share insurance rules apply based on your circumstances.
Federal share insurance is crucial because it guarantees that money in your account is protected regardless of what happens to the credit union. The NCUA routinely reviews how federal credit unions work, so they don't often shut down.
If your credit union does close, the NCUA will transfer your insured money to another credit union that's federally insured. In the event that it can't transfer money to another credit union, you'll get a check for the money that was in your account a few days after the credit union's closure. Either way, your money won't be gone if something bad happens.
Credit unions federally insured by the NCUA will have a plaque at every branch, posted near the tellers. If you're visiting the website, the seal will usually be at the bottom of the homepage.
The NCUA keeps a database of federally insured credit unions. If you search the address, credit union name, or charter number on this database, you can double-check to see if it's federally insured.
If you have a lot of cash, there are ways of maximizing NCUA insurance coverage. You may consider spreading your money across multiple credit unions — or account types — to maximize your NCUA insurance coverage.
NCUA insurance is provided by the National Credit Union Administration. It ensures that credit union members do not lose their deposits — up to $250,000 per member, per ownership category — if a credit union fails. NCUA insurance is the credit union equivalent of FDIC insurance. However, it also covers some retirement accounts.
NCUA insurance provides protection for credit union deposits, including checking accounts, saving accounts, shared deposits, money market accounts, traditional and Roth IRAs, Keough accounts, and irrevocable and revocable trusts.
Check that your credit union is NCUA-insured, be mindful of the coverage limits and account ownership types, and consider spreading your deposits across two or more credit unions to ensure every dollar is insured.
The NCUA steps in when a credit union fails. You will either get a check for the amount of your insured deposit held at the credit union or the NCUA will transfer your funds to another NCUA-insured credit union.
Editorial Note: Any opinions, analyses, reviews, or recommendations expressed in this article are the author’s alone, and have not been reviewed, approved, or otherwise endorsed by any card issuer. Read our editorial standards.
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