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are credit unions fdic insured?

Even though credit unions are not FDIC-insured, they still enjoy strong protection from the federal government. In fact, a different entity essentially does for credit unions what the Federal Deposit Insurance Corporation (FDIC) does for banks. The National Credit Union Administration (NCUA) fund insures up to $250,000 in any account category held that a member holds. So if you open a checking account and an individual retirement account (IRA) at an NCUA-protected credit union, NCUA will cover up to $500,000 of your money.

What Does the NCUA Cover?

The NCUA insures up to $250,000 held in a specific category per individual. Common products like checking accounts, money market accounts, and certificates of deposit (CD) options fall under one category.

However, other options such as traditional IRAs and revocable living trusts stand in their own categories. So if you have an IRA as well as a checking account and a revocable trust held in the same credit union, the federal government protects up to $750,000 of the money you hold there.

As such, in the unlikely event that a member credit union tanks, your money is still safe.

However, this protection applies only to member credit unions. Fortunately, most credit unions are members of the NCUA. In addition, some non-members benefit from similar protections granted by the state where a credit union is located. Some also have private insurance. Nonetheless, it’s always a good idea to make sure the credit union you work with is insured by the NCUA.

Which Credit Union Accounts Are Insured by the NCUA?

Below, we describe some common credit union accounts and how NCUA insurance may apply.

Deposit accounts: The NCUA generally covers checking, savings, money market and CD accounts up to $250,000 per individual and credit union. The NCUA considers the total amount of money held in these accounts for insurance purposes. So if you have $500,000 split between a checking and savings account from the same credit union, insurance applies to only a total of $250,000. However, you can extend NCUA protection by opening these types of accounts at more than one credit union.

Retirement Accounts: The NCUA insures in traditional and Roth IRA as well as Keogh retirement accounts up to $250,000 in aggregate held in a federally insured credit union. This is in addition to the protection extended to other types of accounts with a credit union such as savings accounts. So if you have a Keogh plan as well as an IRA and a checking account with a NCUA-protected credit union, each of those accounts on its own gets insured up to $250,000.

Trusts: The NCUA covers revocable and irrevocable trusts up to $250,000 per beneficiary. However, naming the same beneficiary on multiple trusts held at the same credit union generally doesn’t extend protection of assets held in those trust accounts. However, you should find a financial advisor to help you establish any kind of trust account. Credit unions may have their own rules regarding trusts, and you’d have to address some tax implications as well.

How Do I know if My Credit Union is a Member of the NCUA?

are credit unions fdic insured?

If you live near a credit union branch, chances are it’s insured by the NCUA. The easiest way to find out is to walk into a branch. The NCUA requires all members to place signs in their offices indicating they are a part of the organization. In addition, you can visit the NCUA website to look up members. Nonetheless, all credit unions have field of membership (FOM) documents that outline their charters. This would indicate insurance if any. But once you’re a member of the credit union, you’re a member for life.

So even if you move to a different city, you take the NCUA protection with you.

How Does the NCUA Work?

The president of the U.S. appoints a three-person board that runs the NCUA. Each member serves a six-year term. At most, only two people can serve on the board and belong to the same political party.

But when you open an account at a credit union, your deposits are called shares. The NCUA protects these shares. How? Each member credit union contributes 1% of insured shares toward the NCUA. The organization uses these funds to cover potential claims and their operating costs. However, not a single credit union has lost insured savings since the inception of the NCUA in the 1970s. Furthermore, the NCUA also runs programs designed to help credit unions stay afloat if they’re suffering financially.

How Do I Get More NCUA Insurance?

The best ways to get the most protection from the NCUA is by opening multiple types of accounts from different credit unions. And these days, you can easily open online savings accounts and other options on the internet within a few minutes.

Remember, the NCUA generally protects up to $250,000 held in a single type of account per person. So if you open a trust and a checking account with the same credit union, the NCUA can cover $250,000 for each of those accounts.

Should I Work with a Credit Union?

Credit Unions are generally just as safe as major banks protected by the FDIC. In addition, you can find some of the best savings accounts and the best CD rates around. Oftentimes, these savings options pay interest rates that are competitive with those of major banks.

And in the case of joint accounts, the NCUA insures up to $250,000 per individual. So if you and your spouse open a joint savings account, up to $500,000 in the account gets insured by the NCUA.

The Takeaway

are credit unions fdic insured?

Most credit unions enjoy insurance from the NCUA. This organization functions much like the FDIC does for banks. It generally insures up to $250,000 per individual per account held at a specific credit union. One way you can expand this protection is by opening accounts with different credit unions. Plus, retirement accounts and trusts get specific coverage in addition to the protection granted to checking and savings accounts at member credit unions.

Tips for Improving Your Finances

  • In order to extend NCUA coverage, you can open accounts with different credit unions. And if you hold accounts at banks, you’d likely receive FDIC protection as well. To help you out, we published a report on the best banks in the country.
  • To boost your financial wellness all the more, you should seek a financial advisor. If you’ve never worked with one, we can give you some pointers. Use our SmartAsset financial advisor matching tool. It connects you with up to three financial advisors in your area who can help. It also provides you with access to their profiles so you can evaluate their qualifications and credentials before choosing a financial advisor to work with.

Photo credit: ©iStock.com/YinYang, ©iStock.com/andresr, ©iStock.com/igorbondarenko

Javier Simon, CEPF® Javier Simon is a banking, investing and retirement expert for SmartAsset. The personal finance writer's work has been featured in Investopedia, PLANADVISER and iGrad. Javier is a member of the Society for Advancing Business Editing and Writing. He has a degree in journalism from SUNY Plattsburgh. Javier is passionate about helping others beyond their personal finances. He has volunteered and raised funds for charities including Fight Cancer Together, Children's Miracle Network Hospitals and the National Center for Missing and Exploited Children.
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