If you’re wondering whether your money is as safe in a credit union as it is in a bank, the short answer is yes.
Just like a bank, the money you keep in an account at a federal credit union is insured up to $250,000. The difference is in who is insuring your money. Banks are FDIC insured while federal credit unions are NCUA insured. The key point to remember is that your money is just as safe in a credit union as it is with a bank.
Of course, the full story is a bit more complicated than that. Let’s take a look at just how banks and credit unions are insured.
The FDIC vs. the NCUA
Banks are insured by the Federal Deposit Insurance Corporation or FDIC. Federal Credit Unions are insured by the National Credit Union Administration or NCUA. Your accounts, whether FDIC or NCUA insured, are backed by the full faith and credit of the United States government. You are guaranteed to get your money back, up to $250,000 per depositor, if your bank or federal credit union should fail.
This insurance covers all deposit accounts, such as checking, savings, money market accounts, IRAs, and certificates; but not investments like stocks, bonds, or mutual funds. If you have more than $250,000 you would like to deposit, depositing anything over $250,000 into an account at a different bank or credit union will receive the same insurance coverage.
Both of these organizations work in similar ways. The FDIC requires banks to pay premiums into an insurance fund, while the NCUA requires credit unions to keep 1% of their deposits in an insurance fund. The end result is the same. Your deposits are safe.
State versus federal credit unions
There is one more difference with credit union Share Insurance that you should be aware. Some are chartered by the state while others are chartered by the federal government.
- If they are chartered by the federal government, they’re regulated by, and insured by, the NCUA.
- State chartered credit unions will be regulated by the state and may be insured by the NCUA or a private insurer, depending on the credit union and state regulations.
Typically, a federally-chartered credit union will have “federal” in their name. PenFed, the third largest credit union in the U.S., is one example of a credit union that is federally insured by the NCUA.
A state-chartered credit union will not have “federal” referenced in the name.
Whether they’re state or federal, credit unions that are insured by the NCUA are required to display the official NCUA insurance sign in certain settings. You will probably see it at both branch offices and on the credit union’s website.
How can I be sure my money is safe in a credit union?
No account insured by the NCUA has ever lost money under the $250,000 limit; and if you have over $250,000, you should consider exploring options to help ensure your funds are protected.
If you’re not sure whether a credit union is insured by the NCUA, just ask!