Jane Dotson
Federally insured credit unions in the US offer a safe place for members to save money, with deposits insured up to at least $250,000 per individual depositor. This insurance is provided by the National Credit Union Share Insurance Fund (NCUSIF), which is managed by the National Credit Union Administration (NCUA). The NCUSIF was established by Congress in 1970 to protect members against losses if a federally insured credit union fails. While all banks in the US are required to have federal deposit insurance, the same is not true for credit unions, as some are insured by private insurers.
| Characteristics | Values |
|---|---|
| Insurer | National Credit Union Administration (NCUA) |
| Insured deposits | Up to $250,000 per individual depositor |
| Insured accounts | Individual ownership, joint ownership, payable-on-death (accounts with named beneficiaries), living trusts, IRAs, and KEOGH retirement accounts |
| Insured investments | Money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities is not insured |
| Display of insurance | Federally insured credit unions must display the official NCUA insurance sign at each teller station and on their website |
| Insurance termination | Credit unions must notify members before ending federal insurance |
| State-chartered credit unions | May be insured by private insurers or the NCUA; private insurers provide non-federal share insurance coverage that is not backed by the full faith and credit of the United States government |
| Federal credit unions | Regulated and insured by the NCUA; insured deposits are backed by the full faith and credit of the United States government |
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What You'll Learn
Federally insured credit unions
Share insurance coverage, offered through the National Credit Union Share Insurance Fund (NCUSIF), protects members against losses if a federally insured credit union fails. The NCUSIF was established by Congress in 1970 to insure member share accounts at federally insured credit unions. The NCUSIF coverage is similar to the coverage provided by the FDIC. Credit union members do not need to apply for share insurance coverage as it is provided automatically when they join a federally insured credit union. Each credit union member has at least $250,000 in total coverage for share accounts held at a federally insured credit union. The NCUSIF covers up to $250,000 of the total balance of individuals' credit union accounts. For example, if an individual has $150,000 in a savings account and $100,000 in a money market account at the same credit union, the total amount of their deposits does not exceed $250,000, so they are fully insured by the NCUA. For jointly owned accounts, the NCUSIF insures an additional $250,000 for each account holder. Joint account insurance is separate from insurance for single ownership accounts.
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NCUA insurance
The National Credit Union Administration (NCUA) is an independent agency that administers the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF is a federal insurance fund backed by the full faith and credit of the United States government. It was established by Congress in 1970 to insure member share accounts at federally insured credit unions.
The NCUSIF provides share insurance coverage for members at federally insured credit unions, protecting them against losses if the credit union fails. This coverage is automatic and provided when members join a federally insured credit union. Each member has at least $250,000 in total coverage for their share accounts, including individual accounts, joint accounts, and retirement accounts. The coverage is dollar-for-dollar, including the principal and any posted dividends up to the insurance limit.
Federally insured credit unions are required to display the official NCUA insurance sign at each teller station, on their websites, and where they accept deposits or open accounts. Members can use the NCUA's Share Insurance Estimator to calculate their insurance coverage for various account types, including personal, business, and government accounts.
It is important to note that the NCUA does not insure all types of investments. Money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities is not insured, even if these products are sold at a federally insured credit union. Additionally, safe deposit boxes, their contents, and digital assets like cryptocurrencies are also not insured by the NCUA.
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State-chartered credit unions
The National Credit Union Administration (NCUA) operates and manages the National Credit Union Share Insurance Fund (NCUSIF), which insures deposits at federal credit unions and most state-chartered credit unions. The NCUSIF provides share insurance coverage for credit union members, protecting them against losses if a federally insured credit union fails. This coverage is similar to the coverage provided by the Federal Deposit Insurance Corporation (FDIC) for banks.
Credit union members do not need to apply for share insurance coverage as it is provided automatically when they join a federally insured credit union. Each credit union member has at least $250,000 in total coverage for share accounts held at a federally insured credit union. Federally insured credit unions are required to prominently display the official NCUA insurance sign at each teller station, on their websites, and where they accept share deposits or open accounts.
While federally insured credit unions offer a safe place for members to save money, it is important to note that the NCUA does not insure all types of deposits and investments. The NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these products are sold at a federally insured credit union. Additionally, the NCUA does not insure safe deposit boxes or their contents.
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Private insurers
While all federally insured credit unions are insured by the National Credit Union Share Insurance Fund (NCUSIF), which is administered by the NCUA and backed by the full faith and credit of the US government, there are some state-chartered credit unions that are insured by private insurers. These private insurers provide non-federal share insurance coverage of deposits that are not backed by the US government. This means that members' deposits are not guaranteed by the government in the event that the credit union fails.
The use of private insurers by credit unions is subject to state law. About 15 states allow credit unions to choose between federal or private deposit insurance. Many credit unions opt for private insurance because it is cheaper, despite the higher level of security provided by federal insurance. American Share Insurance (ASI) is currently the only private company in this market and is reportedly well-run and solvent.
Credit unions insured by private insurers can be identified by the absence of the official NCUA insurance sign at teller stations and where accounts are opened. However, it is important to note that even federally insured credit unions may offer investment and insurance products that are not insured by the NCUSIF. Therefore, members should confirm the insurance coverage of their specific accounts and investments.
While the chance of losing money in a privately insured credit union is considered extremely low, it is still a concern for some individuals, especially when depositing substantial amounts of their own funds. Ultimately, the decision to bank with a privately insured credit union depends on individual risk tolerance and the specific circumstances of the credit union in question.
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Share Insurance Fund
The National Credit Union Share Insurance Fund, also known as the NCUSIF or Share Insurance Fund, was established by Congress in 1970 to provide insurance coverage for members of federally insured credit unions. This fund is similar to the coverage provided by the Federal Deposit Insurance Corporation (FDIC) and is backed by the full faith and credit of the United States government.
The Share Insurance Fund insures individual accounts at federally insured credit unions up to $250,000. Additionally, a member's interest in all joint accounts combined is insured up to $250,000. The fund also separately protects IRA and KEOGH retirement accounts up to $250,000 and provides additional coverage for members' trust accounts. Credit union members are automatically covered by the Share Insurance Fund when they join a federally insured credit union, and they do not need to apply for coverage.
The National Credit Union Administration (NCUA) administers the Share Insurance Fund. The NCUA also provides a Share Insurance Estimator tool that allows members to calculate the amount of insurance coverage they have at a federally insured credit union. This tool can be used for personal, business, or government accounts. Federally insured credit unions are required to prominently display the official NCUA insurance sign at each teller station and on their websites.
It is important to note that the Share Insurance Fund does not cover all types of investments or insurance products. For example, it does not cover money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities, even if these products are sold by a federally insured credit union. Additionally, safe deposit boxes and their contents are not insured by the NCUSIF.
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Frequently asked questions
No, not all credit unions are insured. Federally chartered credit unions are regulated and insured by the National Credit Union Administration (NCUA) and the National Credit Union Share Insurance Fund (NCUSIF). State-chartered credit unions may be insured by the NCUA or by private insurers, depending on state law.
Federally insured credit unions are required to display the official NCUA insurance sign at each teller station and where insured deposits are accepted. They must also display the sign on their website. You can also use the NCUA's Credit Union Locator tool to confirm if a credit union is federally insured.
The NCUA insurance covers members' accounts at federally insured credit unions, including individual and joint ownership accounts, payable-on-death accounts, living trusts, IRAs, and other retirement accounts. Each credit union member has at least $250,000 in total coverage for their share accounts. However, it is important to note that the NCUA does not insure money invested in stocks, bonds, mutual funds, life insurance policies, annuities, or municipal securities.
