Takeaways
- Credit unions are not-for-profit financial institutions.
- Federal and state NCUA-insured credit unions have coverage over deposits.
- Credit unions offer checking accounts, savings accounts, auto loans, and mortgages.
- NCUA covers up to $250,000 in deposits per share owner, per insured credit union.
- The NCUA is equivalent to the FDIC for banks.
What is the NCUA?
The NCUA was created by Congress in 1970 as an independent federal agency to insure deposits at federally insured credit unions. The NCUA was founded to protect the safety and soundness of the credit union system by monitoring and reducing the risks to the National Credit Union Share Insurance Fund. The NCUA is backed by the full faith and credit of the United States, and the Share Insurance Fund provides up to $250,000 of insurance to account holders at federal credit unions and most of the state-hardened credit unions [1].
What is Covered with NCUA Insurance?
As with FDIC insurance, you do not need to apply for NCUA insurance. If your deposits are with an NCUA-insured credit union coverage is automatically granted to your account. The NCUA insures up to at least $250,000 per depositor, per institution, per ownership category. Here is a list of covered accounts:
- Checking Accounts
- Savings Account
- Money Market Deposit Accounts (MMAs)
- Certifications of Deposits (CDs)
Smart Money -> How to Open a Checking Account
Smart Money -> How to Open a Savings Account
What Is Not Covered with NCUA Insurance?
Understanding what is covered by NCUA insurance is equally important as grasping what is not covered by the NCUA. NCUA insurance covers cash-like deposits at your federal or state-insured credit union. However, NCUA insurance does not cover all assets and investments held at credit unions. Here is a list of accounts not covered by NCUA insurance [2].
- Stocks
- Bonds
- Mutual Funds
- Life Insurance Policies
- Annuities
- Municipal Securities
- S. Treasury Bill, Bonds, or Notes
Smart Money -> How to Invest in Stocks
Smart Money -> What is a Mutual Fund?
Is My Credit Union Insured?
Luckily, the NCUA has made it easy to tell if your credit union is NCUA-insured because federally insured credit unions are required to indicate they are insured by displaying the official logo of the National Credit Union Share Insurance Fund (NCUSIF) insurance in their offices and at branch locations. If you want to double-check whether your credit union is covered you can use the NCUA’s website [3].
How Does NCUA Insurance Work?
NCUA-insured credit unions function similarly to FDIC-insured banks. The U.S. government has established the NCUA, an independent agency, to regulate the credit union industry and monitor the health of the credit union system. By the end of the first quarter of 2023, there was over $2.21 trillion of total assets at federally insured credit unions [4].
Smart Summary
Saving money is critical to increasing your financial health and net worth. Whether you are saving for an emergency fund, down payment to buy a house, purchasing a new car, or bolstering your slush fund, stashing extra cash in a credit union or bank is a smart money move. The NCUA protects those cash deposits and ensures your funds are federally protected. NCUA insurance should give you peace of mind as you work toward your financial goals. Choosing the best bank and credit union will reduce any financial headaches.
[1] NCUA. About NCUA. Last Accessed September 5, 2023
[2] NCUA. Share Insurance Coverage. Last Accessed September 6, 2023
[3] NCUA. How Your Accounts are Federally Insured Brochure. Last Accessed September 5, 2023
[4] NCUA. Quarterly Credit Union Data Summary 2023 Q1. Last Accessed September 5, 2023
