How Much Money Is Insured in a Credit Union?

Credit unions, as financial institutions, offer a secure environment for deposits, largely due to a robust federal insurance program. This system is designed to protect members’ funds in the unlikely event that a credit union faces financial difficulties and fails.

The Insuring Agency and Standard Coverage

The National Credit Union Administration (NCUA) serves as the independent federal agency responsible for insuring deposits at federal credit unions and most state-chartered credit unions. This agency operates and manages the National Credit Union Share Insurance Fund (NCUSIF). The NCUSIF is a federal insurance fund that is backed by the full faith and credit of the United States government, much like the insurance provided for banks.

The standard insurance amount provided by the NCUA is $250,000 per member, per credit union, for each account ownership category.

Types of Accounts Covered

NCUA insurance extends to a broad range of financial products and accounts commonly held at credit unions. These include fundamental savings accounts, often referred to as share accounts, which are foundational to credit union membership. Checking accounts, known as share draft accounts, are also fully covered under this insurance.

Additionally, money market accounts and certificates of deposit (CDs), or share certificates, fall under NCUA protection. Any official items issued by a credit union, such as cashier’s checks or money orders, are also insured.

Understanding Coverage for Different Ownership Categories

Members can strategically structure their accounts to potentially achieve more than the standard $250,000 in coverage at a single credit union. This is possible because the NCUA insures funds based on different ownership categories. Each distinct category can provide a separate $250,000 insurance limit.

For single ownership accounts, where one person owns the account, all such accounts at the same credit union are combined and insured up to $250,000. For example, if an individual has a checking account and a savings account, both solely in their name, the total balance of these accounts is insured up to $250,000. Joint ownership accounts, held by two or more people, are insured separately. Each co-owner’s share in all joint accounts at the same credit union is insured up to $250,000, effectively providing up to $500,000 in coverage for two owners.

Retirement accounts, such as traditional IRAs, Roth IRAs, SEP IRAs, and SIMPLE IRAs, form a distinct ownership category. All of a member’s retirement accounts at the same credit union are aggregated and insured separately up to $250,000. This coverage is in addition to any individual or joint account coverage a member may have. Trust accounts, both revocable and irrevocable, offer another avenue for separate insurance coverage. For revocable trusts, each unique beneficiary named in the trust can qualify for up to $250,000 in coverage per owner, subject to specific requirements. Irrevocable trusts also provide separate coverage, with each owner insured up to $250,000 for each beneficiary, provided certain membership conditions are met.

What is Not Covered

While NCUA insurance provides extensive protection for deposits, it is important to understand that not all financial products or services offered by a credit union are insured. Investments in market-based products, even if purchased through the credit union, are generally not covered. This includes stocks, bonds, mutual funds, annuities, and cryptocurrencies.

The contents of safe deposit boxes are also not insured by the NCUA; these are considered personal property and are not deposits. Furthermore, insurance products sold by a credit union and loan products are not covered by deposit insurance. These distinctions are important for members to recognize to fully understand the scope of their insured funds.