Are Credit Unions FDIC Protected?
Learn how your credit union deposits are federally protected, similar to bank accounts, and understand your specific insurance coverage.
Credit unions offer a secure place for funds, much like traditional banks, benefiting from a robust federal insurance system. While many people are familiar with the Federal Deposit Insurance Corporation (FDIC) for banks, credit unions operate under comparable federal protection. This ensures that money members deposit into credit unions is safe and accessible, even in the unlikely event of a financial institution’s failure.
Insurance for Credit Unions
Credit unions are insured by the National Credit Union Administration (NCUA) through its Share Insurance Fund. The NCUA is an independent federal agency that regulates and supervises federal credit unions and insures member deposits. This Share Insurance Fund operates similarly to the FDIC, providing protection for deposit accounts.
The Share Insurance Fund is backed by the full faith and credit of the U.S. government, offering a strong guarantee for members’ savings. This insurance covers deposit accounts up to $250,000 per member, per federally insured credit union, for each account ownership category. This coverage extends to various account types, including checking accounts, savings accounts, money market accounts, and certificates of deposit (CDs).
Differences Between Banks and Credit Unions
While both banks and credit unions provide deposit insurance, their fundamental structures and regulatory frameworks differ. Banks are for-profit institutions owned by shareholders, aiming to generate profits. Their deposits are insured by the FDIC, an independent agency.
Credit unions are not-for-profit financial cooperatives owned by their members. Any earnings generated are reinvested back into the institution or returned to members through benefits such as lower fees, higher savings rates, and lower loan rates. This member-centric model means credit unions are regulated by the NCUA, which insures member deposits. Despite different insurers, the level of protection offered to consumers is comparable.
Understanding Your Coverage
Understanding how limits apply to different account ownership categories is key to credit union insurance coverage. The standard insurance amount of $250,000 per member applies to individual accounts. Joint accounts, held by two or more people, are insured separately, providing $250,000 per owner, effectively allowing up to $500,000 for a two-person joint account. Certain retirement accounts, such as IRAs and Keoghs, also receive separate insurance coverage up to $250,000.
To determine the total insured amount across various account types at a single credit union, members should consider how their accounts are titled and structured. If deposits exceed the $250,000 limit for a single ownership category at one institution, spreading funds across different ownership categories or among multiple federally insured credit unions can increase overall coverage. Federally insured credit unions are required to display the official NCUA insurance sign at their branches and on their websites. Members can also utilize the NCUA’s online Credit Union Locator tool or their Share Insurance Estimator to confirm a credit union’s insured status and calculate their specific coverage.