NCUA vs. FDIC - Are Credit Unions Safer Than Banks? (2024)

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Are Credit Unions Safer Than Banks?

Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.

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In this article, we will further answer the question of “Are credit unions federally insured”, and compare their products and services to traditional banks.

What Is The NCUA?

The National Credit Union Administration (NCUA) is an independent agency created by the U.S. government to regulate and protect credit unions and their owners.

Just like the FDIC, the NCUA insures up to $250,000 to all credit union members and provides protection in the event of a credit union failure.

Moreover, NCUA is presided over by a three-member board, appointed by the President and confirmed by the Senate. The selected members belong to different political parties, and each member serves for a term of six years.

After the creation of NCUA, the government also established the National Credit Union Insurance Fund (NCUSIF) that’s responsible for ensuring credit unions. NCUSIF is assigned to provide insurance of up to $250,000 per account to credit unions that are on the verge of failure.

Now that you know how much credit unions are insured for, it’s also important to know that each credit union has to contribute at least 1% of their shares to the NCUSIF. Also, to gain NCUA’s membership, a credit union must get a state or federal charter.

NCUA vs. FDIC: What’s The Difference?

Both the NCUA and FDIC are independent federally owned agencies responsible for taking measures to keep financial institutions afloat.

People usually ask, “are credit unions FDIC insured”, but now we know that FDIC insures banks only, and the agency responsible for credit unions is the NCUA—so when it comes to NUAC vs. FDIC, the difference boils down to the institutions they cover.

Below is some additional information regarding the NCUA and FDIC.

What NCUA Coverage Protects?

The NCUA insures up to $250,000 to each member of the credit union. If you have more than one account in a credit union, your account’s total deposits are calculated and collectively insured up to $250,000.

NCUA provides coverage for individual accounts such as single-owned credit union accounts, joint accounts shared by more than two people as well as traditional IRA or KEOGH retirement accounts.

Moreover, it protects revocable trust accounts that have an owner and multiple beneficiaries and irrevocable trust accounts created due to a written trust agreement.

Also, money market accounts that allow you to pay interest according to the money market’s current interest rates are covered by NCUA as well.

What isn’t covered by NCUA?

NCUA is tasked with insuring deposits only.

Some of the accounts that do not qualify for NCUA coverage include mutual funds used for collecting money from investing bodies to buy bonds. The list also includes stocks that provide ownership of an entity through an investment, life insurance policies, and annuities that are offered by affiliated bodies.

What FDIC coverage protects?

FDIC covers checking accounts that allow you to write checks and savings accounts that help you save money by earning interest.

Moreover, the FDIC insures money market accounts, which are high interest-earning accounts offering limited to no check-writing services and deposit certificates with a fixed amount of interest and determined withdrawal date.

It also provides insurance for revocable trust accounts that are owned by one person but have one or more beneficiaries and irrevocable trust accounts created by a written agreement.

What isn’t covered by FDIC?

Some of the accounts that FDIC does not cover include stocks, bonds, annuities, mutual funds, life insurance policies, safe deposit boxes, U.S. treasury bills, and municipal investments.

Moreover, only your account balance and compound interest on it will be insured, provided the balance remains under the limit. If not, the amount exceeding the limit might not be covered by FDIC and left vulnerable.

Hence, it is essential to check with the financial institutions of your choice about any limitations in their insurance criteria.

Is A Credit Union The Best Choice For Me?

Credit unions are not-for-profit organizations led by a team that solely strives for the financial stability of its members.

Credit unions offer more personalized financial services compared to traditional banking institutions, and even if you’re suddenly laid off from your job or pushed into a difficult situation, your credit union will be more than willing to help you stay afloat.

Credit unions also provide lower interest rates for loans and help you earn more money on your deposits. Not only can you save on lower interest rates, but you can also reap the benefits of lower service charges.

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For over 60 years, CU SoCal has helped over 121,000 members achieve their financial goals.

We offer low-interest loans, better savings, lower fees, and much more to ensure your financial stability for the long term. Not only this, but we also provide personalized guidance on our products, services, and tools that you might be interested in.

Our services include credit card programs that help you earn reward points, auto loans, personal loans, home equity loans, and lines of credit and mortgage payments.

Now that you know how safe credit unions are and how much are these credit unions insured for – make us your financial partner and get in touch with us. Apply for a new online credit union account today!

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NCUA vs. FDIC - Are Credit Unions Safer Than Banks? (2024)


NCUA vs. FDIC - Are Credit Unions Safer Than Banks? ›

Federally insured credit unions and banks are both safe places to keep your money. The National Credit Union Administration protects deposits (within certain limits) at insured credit unions and the Federal Deposit Insurance Corp. protects deposits (within certain limits) at insured banks.

Which is safer NCUA vs FDIC? ›

One of the only differences between NCUA and FDIC coverage is that the FDIC will also insure cashier's checks and money orders. Otherwise, banks and credit unions are equally protected, and your deposit accounts are safe with either option.

Are credit unions safer than banks? ›

Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.

What happens if a credit union fails? ›

If a credit union is placed into liquidation, the NCUA's Asset Management and Assistance Center (AMAC) will oversee the liquidation and set up an asset management estate (AME) to manage assets, settle members' insurance claims, and attempt to recover value from the closed credit union's assets.

Are all credit unions protected by NCUA? ›

NCUA also operates and manages the National Credit Union Share Insurance Fund (NCUSIF). Backed by the full faith and credit of the U.S. government, the NCUSIF insures the accounts of millions of account holders in all federal credit unions and the vast majority of state-chartered credit unions.

Are credit unions at risk of failure? ›

Experts told us that credit unions do fail, like banks (which are also generally safe), but rarely. And deposits up to $250,000 at federally insured credit unions are guaranteed, just as they are at banks.

Which bank is safest? ›

Summary: Safest Banks In The U.S. Of April 2024
BankForbes Advisor RatingLearn More
Chase Bank5.0Learn More Read Our Full Review
Bank of America4.2
Wells Fargo Bank4.0Learn More Read Our Full Review
1 more row
Jan 29, 2024

Are credit unions safe if banks collapse? ›

If the bank fails, you'll get your money back. Nearly all banks are FDIC insured. You can look for the FDIC logo at bank teller windows or on the entrance to your bank branch. Credit unions are insured by the National Credit Union Administration.

Will credit unions survive the bank crash? ›

Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money. Both credit unions and banks have deposit insurance and are generally safe places for your money.

Are credit unions safe from banking collapse? ›

Credit unions are insured by the National Credit Union Administration (NCUA). Just like the FDIC insures up to $250,000 for individuals' accounts of a bank, the NCUA insures up to $250,000 for individuals' accounts of a credit union. Beyond that amount, the bank or credit union takes an uninsured risk.

Is my money safe in a credit union if the economy crashes? ›

How your money is protected. Money deposited into bank accounts will be safe as long as your financial institution is federally insured. The FDIC and National Credit Union Administration (NCUA) oversee banks and credit unions, respectively. These federal agencies also provide deposit insurance.

Why do banks not like credit unions? ›

For decades, bankers have objected to the tax breaks and sponsor subsidies enjoyed by credit unions and not available to banks. Because such challenges haven't slowed down the growth of credit unions, banks continue to look for other reasons to allege unfair competition.

What is the downside of a credit union? ›

Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.

Is my money safe with NCUA? ›

Just like the FDIC, the NCUA insures up to $250,000 to all credit union members and provides protection in the event of a credit union failure.

What is not covered by NCUA? ›

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.

How do I know if my credit union is safe? ›

You can and should also contact the Consumer Financial Protection Bureau. If it says that the regulator is the FDIC, it is likely a state-chartered bank. While you can contact the FDIC, you should also search for the financial institution at the California Department of Financial Protection and Innovation's website.

What does the NCUA not insure? ›

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.

How strong is NCUA insurance? ›

The NCUA insures up to $250,000 per depositor, per institution, per ownership category. “Ownership category” refers to account type, usually single or joint. If you have a single and a joint account at the same institution, both are insured up to the $250,000 limit.

Does FDIC and NCUA insure your accounts up to $500000? ›

The FDIC insures deposits according to the ownership category in which the funds are insured and how the accounts are titled. The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category.

Are beneficiaries covered under NCUA? ›

To qualify for coverage under NCUA regulations, there are several conditions that must be met: Beneficiaries must be a qualifying family member. Beneficiaries must be specified in the account records. The title of the account must include a term such as in trust for or payable on death to.


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