Are Credit Union CDs FDIC Insured?

When considering where to place savings, particularly in Certificates of Deposit (CDs), understanding how these funds are protected within credit unions is important. This protection helps safeguard deposited money, providing reassurance. The system clarifies how credit union deposits, including CDs, receive federal backing.

Credit Union Deposit Insurance

Credit unions operate under a different federal insurance system than traditional banks. While banks are insured by the Federal Deposit Insurance Corporation (FDIC), credit unions are insured by the National Credit Union Administration (NCUA).

The NCUA, an independent federal agency, administers the National Credit Union Share Insurance Fund (NCUSIF). This fund was established by Congress in 1970 to protect member share accounts at federally insured credit unions. This federal insurance is backed by the full faith and credit of the U.S. government, ensuring deposits are secure. No member has ever lost money in a federally insured credit union. Approximately 98% of all credit unions are covered by NCUSIF protection, provided automatically when a member joins.

NCUA Coverage for Certificates of Deposit

The NCUA’s share insurance applies to various types of deposits, including Certificates of Deposit (CDs), which are often referred to as share certificates. These deposits are covered dollar-for-dollar, including principal and any accrued dividends, up to the insurance limit. The standard coverage limit is $250,000 per depositor, per federally insured credit union, for each account ownership category.

Different ownership categories allow for increased coverage beyond the standard $250,000 limit. For instance, single ownership accounts are insured up to $250,000 per member. Joint accounts, owned by two or more individuals, are insured up to $250,000 per owner, meaning a joint account with two owners could be insured for up to $500,000. Retirement accounts, such as Individual Retirement Accounts (IRAs) and KEOGH accounts, receive separate insurance coverage of up to $250,000 per member. Trust accounts, both revocable and irrevocable, can also qualify for additional coverage based on the number of beneficiaries.

Understanding the Differences

While the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) operate under different names, their fundamental purpose and the level of protection they provide to depositors are essentially the same. The FDIC insures deposits at banks, while the NCUA insures deposits at credit unions. Both agencies are independent federal entities.

The protection offered by both the FDIC and NCUA extends to the same types of deposit accounts, including checking, savings, money market accounts, and Certificates of Deposit (CDs). Each agency maintains the same standard insurance limit of $250,000 per depositor, per institution, per ownership category. This means that whether funds are placed in a bank CD or a credit union CD, they receive comparable federal protection.