Haris Ashley
Credit unions are financial institutions that offer a safe place for their members to save money. They are insured by the National Credit Union Administration (NCUA), which operates and manages the National Credit Union Share Insurance Fund (NCUSIF). This fund provides share insurance coverage for credit union members, protecting their deposits up to $250,000 per individual depositor. The NCUA is an independent federal agency that was created by Congress to regulate, charter, and supervise federal credit unions. It provides federal insurance for deposits at credit unions, similar to how the FDIC provides federal insurance at banks. While not all credit unions have NCUA insurance, federally insured credit unions must display the official NCUA insurance sign, and members can use the NCUA's online tools to confirm their credit union's insurance status.
| Characteristics | Values |
|---|---|
| Definition of a depository institution | As defined in section 19(b)(1)(A) of the Federal Reserve Act (FRA), a depository institution includes any insured credit union, which includes all FCUs and state-chartered credit unions insured by NCUA. |
| Insurance for deposits at credit unions | The National Credit Union Administration (NCUA) operates and manages the National Credit Union Share Insurance Fund (NCUSIF), which provides share insurance coverage for credit union members against losses. |
| Insurance limit | The NCUSIF provides all members of federally insured credit unions with $250,000 in coverage for their single ownership accounts. |
| Automatic insurance coverage | Share insurance coverage is provided automatically when individuals join a federally insured credit union. |
| Display of insurance information | Federally insured credit unions are required to display the official insurance sign at each teller station, on their websites, and where they accept share deposits or open accounts. |
| Federal vs. state-chartered credit unions | Federally chartered credit unions are required to have NCUA insurance. State-chartered credit unions may be insured by the federal government or a private company, depending on state law. |
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What You'll Learn
Federally insured credit unions
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. This coverage also applies to non-member deposits when permitted by law. NCUA insurance covers members' accounts, including principal and any posted dividends through the date of the insured credit union's closing, up to the insurance limit.
The NCUA's Share Insurance Estimator lets consumers, credit unions, and their members know how its share insurance rules apply to member share accounts. The Estimator can be used for personal, business, or government accounts. Personal accounts include individual ownership, joint ownership, payable-on-death (accounts with named beneficiaries), living trusts, and IRAs.
The NCUA regulates and insures federal credit unions, while state-chartered credit unions are regulated by the state supervisory authority where the credit union's main office is located and may or may not be insured by the NCUA.
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NCUA and its role
The National Credit Union Administration (NCUA) is an independent federal agency that was created by the US Congress in 1970 to insure deposits at federally insured credit unions, protect the members who own credit unions, and regulate and supervise federal credit unions. The NCUA is one of two agencies that provide deposit insurance to depositors in US depository institutions, the other being the Federal Deposit Insurance Corporation (FDIC), which insures commercial banks and savings institutions.
The NCUA operates and manages the National Credit Union Share Insurance Fund, which insures the deposits of more than 124 million account holders in all federal credit unions and most state-chartered credit unions. The NCUA's Share Insurance Estimator lets consumers, credit unions, and their members know how its share insurance rules apply to member accounts—what's insured and what portion, if any, exceeds coverage limits. Federally insured credit unions offer a safe place for members to save money, with deposits insured up to at least $250,000 per individual depositor. Credit union members have never lost insured savings at a federally insured credit union.
The NCUA is administered through three regional offices, each responsible for specific states and territories. It is governed by a three-member board appointed by the US president and confirmed by the Senate. Board members serve six-year terms and cannot be reappointed to succeed themselves, unless initially appointed to fill an unexpired term. The NCUA's goals include advancing economic equity and justice within the credit union movement, enhancing support for minority depository institutions, ensuring compliance with fair lending laws, and proactively addressing future challenges like climate change.
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Deposit insurance coverage
Federal Credit Unions (FCUs) are insured depository institutions. The deposits at federally insured credit unions are protected by the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF was established by Congress in 1970 to insure member share accounts at federally insured credit unions. The fund is administered by the National Credit Union Administration (NCUA) and insured deposits of more than 143 million account holders in all federal credit unions and most state-chartered credit unions.
The NCUSIF is similar to the deposit insurance coverage provided by the Federal Deposit Insurance Corporation (FDIC). The NCUSIF covers individual accounts at federally insured credit unions up to $250,000, and 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. Credit union members can use the NCUA's Share Insurance Estimator to calculate the amount of insured funds at a federally insured credit union. The estimator can be used for personal, business, or government accounts.
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, even if these investment or insurance products are sold at a federally insured credit union. Additionally, the NCUA does not insure safe deposit boxes or their contents.
Some deposits at state-chartered credit unions are insured by private insurers, providing non-federal share insurance coverage that is not backed by the full faith and credit of the United States government. As such, members are advised to confirm that their credit union is federally insured by visiting the NCUA's Credit Union Locator tool.
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State-chartered credit unions
In the United States, credit unions are divided into two categories: state-chartered and federally chartered. State-chartered credit unions have a charter granted by a state and follow state regulations. They fall under the regulatory authority of their respective state's financial services division.
State regulatory authorities often have a much greater familiarity with their local credit unions than the NCUA has with federally chartered credit unions. Additionally, federal credit unions have maximum interest rate regulations, whereas different states may have higher or no limits on interest rate charges.
Not all states charter or regulate credit unions. Arkansas, Delaware, South Dakota, Wyoming, and the District of Columbia do not have state-specific charters, meaning all credit unions within those states must be federally chartered. Some, though not all, state-chartered credit unions carry deposit insurance that is backed by the full faith and credit of the United States.
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FDIC-insured banks vs. NCUA-insured credit unions
Federal Credit Unions (FCUs) are insured depository institutions. The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) are independent federal agencies that insure deposits at banks and credit unions, respectively. The FDIC was created in 1933 following a series of bank failures during the Great Depression that led to a national financial crisis. Since its creation, no depositor has lost any insured deposits due to bank failure. The NCUA, on the other hand, was created in 1970 to insure deposits made by credit union members. Credit unions are not-for-profit and owned by their members.
Both the FDIC and NCUA offer similar coverage, protecting cash deposits up to $250,000 per depositor, per account ownership category. This coverage is automatic and applies to various common account types, including free checking accounts and high-yield savings accounts. Neither the FDIC nor the NCUA covers investments such as stocks, bonds, mutual funds, or cryptocurrencies.
FDIC-insured banks and NCUA-insured credit unions are both considered safe places to store your money. To check if a bank is FDIC-insured, look for the FDIC sign at the bank, on its website, or use the FDIC's BankFind Suite tool. Similarly, to verify if a credit union is NCUA-insured, look for the official NCUA insurance logo at its offices or on its website, or use the online tool provided by the NCUA.
The primary difference between the FDIC and NCUA lies in the type of customers they protect. While the FDIC insures deposits for bank customers, the NCUA insures deposits for credit union members. Additionally, the NCUA is responsible for regulating federal credit unions, while the FDIC helps supervise insured banks and is the primary regulator for state-chartered banks that opt out of the Federal Reserve System.
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Frequently asked questions
A credit union is a financial institution that offers a safe place for its members to save money.
The NCUA is an independent federal agency that oversees the deposit insurance coverage the U.S. government provides to members of federally insured credit unions.
No. While all banks in the US are required to have federal deposit insurance, this is not the case for credit unions. Federal Credit Unions (FCUs) are insured depository institutions, but some credit unions are insured by private insurers.
The National Credit Union Share Insurance Fund insures individual accounts at federally insured credit unions for up to $250,000.
All federally insured credit unions must display the official NCUA insurance sign at each teller station, on their websites, and where they accept share deposits or open accounts. You can also use the NCUA's Credit Union Locator tool to check if a credit union is federally insured.
