Jeffrey Wade
Federally insured credit unions in the US are insured by the National Credit Union Administration (NCUA), which was founded in the 1970s. Credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC), which was set up in 1934 after a series of bank failures during the Great Depression. The FDIC insures banks, while the NCUA insures credit unions and regulates federal credit unions. Both the FDIC and NCUA require member institutions to display their affiliation in locations where customers can easily see them, such as in windows and at teller stations, as well as online.
| Characteristics | Values |
|---|---|
| Organization | NCUA |
| Insurance Coverage | $250,000 per account |
| Types of Accounts Covered | Checking, savings, money market, CD, retirement |
| Protection Extension | Opening multiple accounts at different credit unions |
| Online Lookup Tool | Yes |
| Physical Location Lookup | Yes |
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What You'll Learn
- Credit unions are insured by the NCUA, not the FDIC
- NCUA insurance covers checking, savings, money market and CD accounts
- FDIC insurance was introduced after a series of bank failures in the 1920s and 30s
- NCUA protection can be extended by opening accounts at multiple credit unions
- NCUA runs programs to help credit unions stay afloat during financial difficulties
Credit unions are insured by the NCUA, not the FDIC
Credit unions are insured by the National Credit Union Administration (NCUA), a government agency that insures deposits at federally insured credit unions. The NCUA was established by Congress in 1970 to provide insurance for member share accounts, similar to the deposit insurance offered by the Federal Deposit Insurance Corporation (FDIC) for banks. While the NCUA and FDIC have similar coverage limits and automatic insurance, they differ in the types of institutions they regulate, with the NCUA responsible for federal credit unions and the FDIC for banks.
The NCUA provides insurance for credit union members' share accounts, protecting their cash deposits up to $250,000 per depositor, per credit union, and per ownership category. This coverage is automatic and extends to various account types, including individual, joint, retirement, and trust accounts. Credit unions must disclose their NCUA membership at teller stations, on their websites, and where they accept share deposits or open accounts. Members can use the NCUA's online tools to confirm their credit union's federal insurance status and calculate their insured funds.
On the other hand, the FDIC was established in 1933 following a series of bank failures during the Great Depression, resulting in losses for many Americans. FDIC insurance was introduced in 1934 to protect bank deposits, and it has since prevented depositors from losing their insured funds during subsequent bank failures. The FDIC insures eligible deposit accounts at banks, covering up to $250,000 per depositor, similar to the NCUA's coverage limit.
While credit unions are insured by the NCUA and banks by the FDIC, the decision between the two types of institutions should not be based solely on the insuring agency. Both credit unions and banks offer comparable safety for deposits, and individuals should choose based on their financial needs, considering account types, rates, fees, and features offered by each institution.
In summary, credit unions are insured by the NCUA, providing protection for members' deposits, while the FDIC insures bank deposits. Both agencies play a crucial role in safeguarding the financial security of individuals by ensuring that their deposits are insured in the event of institutional failure.
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NCUA insurance covers checking, savings, money market and CD accounts
The National Credit Union Administration (NCUA) was created by Congress to regulate credit unions and insure members' deposits. The NCUA insurance covers checking, savings, money market and CD accounts, as well as some retirement plans and employee benefit plans. This coverage is automatic and provided when a person joins a federally insured credit union.
NCUA insurance guarantees that members will receive their money—up to USD 250,000 per person, per institution, per ownership category—from their deposit account if their credit union fails. It is important to note that deposits beyond USD 250,000 are not insured, even if they are in an eligible account. However, individuals can distribute their money across different institutions to maximise their coverage.
The NCUA insurance also covers non-member deposits when permitted by law. Additionally, it covers members' accounts dollar-for-dollar, including principal and any posted dividends through the date of the insured credit union's closing, up to the insurance limit.
The NCUA provides an online tool to check if a credit union is NCUA-insured. Credit unions are required to disclose their membership at teller stations, on their websites, and in their windows. Members can also calculate their coverage using the NCUA's Share Insurance Estimator, available on the NCUA's consumer website, MyCreditUnion.gov.
NCUA insurance does not cover 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.
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FDIC insurance was introduced after a series of bank failures in the 1920s and 30s
The Federal Deposit Insurance Corporation (FDIC) was introduced in 1933 during the Great Depression, following a series of bank failures in the late 1920s and early 1930s. These failures resulted in a national financial crisis, with many Americans losing their life savings. FDIC insurance was thus created to protect bank depositors and restore trust in the American banking system. Initially, the FDIC insured deposits of $2,500 (later increased to $5,000), with funds pooled from various banks.
The Great Depression, sparked by the stock market crash of 1929, caused a wave of bank runs and failures. Between 1929 and 1933, over 4,000 American banks collapsed, resulting in losses of approximately $1.3 billion for depositors. This was exacerbated by a series of bank panics in 1930 and 1931, transforming a typical economic downturn into the longest and deepest depression in US history.
One notable collapse was that of Caldwell and Company in November 1930, one of the largest banking chains in the South. This failure caused numerous regional commercial banks to suspend operations temporarily, triggering panic among customers who rushed to withdraw their funds. This destabilised financial institutions, leading to even more bank failures and depleting US gold reserves.
The FDIC insurance program was officially introduced in 1934 to safeguard depositors' funds. Since then, despite additional bank failures, no insured depositor has lost any of their insured deposits due to the FDIC's guarantee. Over time, the FDIC coverage limit has increased significantly, reaching $250,000 per depositor per account today. This coverage is automatic, protecting cash in eligible deposit accounts while excluding investments such as stocks, bonds, mutual funds, and cryptocurrency.
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NCUA protection can be extended by opening accounts at multiple credit unions
The National Credit Union Administration (NCUA) is a government agency that insures deposits at member credit unions. The NCUA insures individual accounts at federally insured credit unions for up to $250,000, and each member's interest in all joint accounts is insured for up to $250,000 as well. This means that a joint savings account held by a married couple, for example, would be insured for up to $500,000, with $250,000 of coverage for each account holder. Additionally, the NCUA also separately protects IRA and KEOGH retirement accounts up to $250,000.
It is important to note that NCUA insurance is automatic for members of federally insured credit unions, and members do not need to take any extra steps to ensure their money is protected. Additionally, credit unions are required to disclose their membership in the NCUA at teller stations and on their websites. Individuals can also use the NCUA's online tool to verify if a credit union is NCUA-insured.
While the NCUA provides protection for deposits at credit unions, it is important to understand that it does not cover all types of investments. For example, stocks, bonds, mutual funds, and cryptocurrency investments are not covered by NCUA insurance. Therefore, individuals should carefully consider their financial needs and goals when deciding where to deposit their money.
In conclusion, by understanding the protection offered by the NCUA and strategically opening accounts at multiple federally insured credit unions, individuals can extend their NCUA protection and ensure that their deposits are fully protected.
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NCUA runs programs to help credit unions stay afloat during financial difficulties
The National Credit Union Administration (NCUA) was created by Congress in 1970 to insure members' deposits in federally insured credit unions. Federally insured credit unions offer a safe place for individuals to save their money, with deposits insured up to at least $250,000 per individual depositor. The NCUA is also responsible for regulating federal credit unions.
NCUA data shows that total assets in federally insured credit unions rose by $52 billion, or 2.3%, over the year ending in the fourth quarter of 2024, to $2.31 trillion. Federally insured credit unions added 3.1 million members over the year, and credit union membership in these institutions reached 142.3 million in the fourth quarter of 2024. The credit union system's net worth increased by $14.2 billion, or 5.9%, over the year to $255.3 billion.
Despite the overall positive outlook, there were signs of financial stress on credit union balance sheets during 2024. Aggregate loan performance began to deteriorate in 2022, and the trend continued through 2024. The overall loan delinquency rate is currently at its highest point since the end of 2013, while the rolling 12-month net charge-off rate is at its highest since the second quarter of 2012.
In response to these challenges, the NCUA has outlined its supervisory priorities for 2025, focusing on areas posing the highest risk to credit union members, the credit union industry, and the National Credit Union Share Insurance Fund (Share Insurance Fund). The NCUA will continue to review lending and risk-management practices, including the assessment of modification and workout strategies for borrowers experiencing financial difficulties. Examiners will evaluate the reasonableness and adequacy of controls and management oversight in these strategies.
The NCUA's priorities also include addressing credit risk, with a focus on credit card and used vehicle loan portfolios that have shown rapid deterioration. The NCUA will review loan underwriting standards, collection programs, Allowance for Credit Losses reserves, and charge-off practices. Additionally, the NCUA prioritizes transparency in the financial system, advocating for the disclosure of overdraft and non-sufficient fund (NSF) fee data by credit unions. This transparency enables consumers to make informed choices and promotes fair competition.
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Frequently asked questions
There are 5,082 federally insured credit unions in the US as of March 2023.
You can use the National Credit Union Administration's (NCUA) online tool to check if a credit union is federally insured. Alternatively, walk into a branch—federally insured credit unions are required to display signs in their offices and on their websites.
Federal insurance covers members' accounts, dollar-for-dollar, including principal and posted dividends up to $250,000 per individual and credit union. It does not cover stocks, bonds, mutual funds, life insurance policies, annuities, municipal securities, or safe deposit boxes and their contents.
The National Credit Union Share Insurance Fund (NCUSIF) protects members against losses if a federally insured credit union fails. Since the inception of the NCUA in the 1970s, no credit union has lost insured savings.
