The National Credit Union Administration (NCUA) regulates and insures all federal and most state-chartered credit unions in the United States. NCUA-backing for credit unions is analogous to FDIC-Insurance for banking institutions. The failure of a credit union is unlikely, but if one occurs and the institution is backed by the NCUA, deposits will be safe up to a maximum insured limit of $250,000. Learn more about your account coverage below.
- The NCUA Explained
- How the NCUA works
- What does the NCUA Cover?
- NCUA vs. FDIC: What’s the Difference?
The NCUA Explained
The NCUA is an independent federal agency that supervises and insures almost all credit unions in the United States. It was formed in 1970 in response to the increased number of credit union members and the need to regulate them effectively and efficiently. The NCUA now regulates over 98% of credit unions in the United States.
In addition to creating the NCUA, the government formed the National Credit Union Share Insurance Fund (NCUSIF), and charged it with insuring credit union deposits. All credit unions under the NCUA are insured by the NCUSIF and cannot revoke this insurance unless the NCUA ends the membership. However, some state-chartered credit unions are insured by private insurance or institutions that are not backed by the NCUA or the government.
The NCUSIF is backed by the full faith and credit of the United States government and now insures the members of more than 6,000 federal credit unions. Due to this insurance fund, federally insured credit union members have never lost any insured savings.
How the NCUA Works
The NCUA is administered by a three-person Board that is appointed by the President of the United States and confirmed by the Senate. Each Board member serves for a six-year term, and no more than two Board members of the three can be from the same political party. The NCUA reviews its regulations every three years and, as part of commitment to transparency, allows public comment on regulations that are under review and ones that are proposed.
As a member of a federal credit union, you are insured by the NCUSIF. However, you do not pay directly for your deposit insurance coverage. Instead, every credit union must make contributions that are equal to 1% of their insured shares and deposits in the NCUSIF. These funds are used to cover potential claims and to pay for the operations of the NCUA. The agency has several programs that provide aid to any insured credit union that is experiencing issues, with the failure of the institution being the last resort.
All credit unions insured by the NCUA are required to display the official NCUSIF sign in their offices and branches. In order to be backed by the NCUA, a credit union must have either a state or federal charter. Almost all credit unions are members of the NCUA but if you need to check whether your accounts are insured, you can call your credit union or visit NCUA.gov.
What Does the NCUA Cover?
In most cases, the NCUA insures up to $250,000 per owner in an account category held at any one federal credit union. When a credit union member has more than one account in an institution and account category, the total account deposits are calculated, and are insured up to the $250,000 level. This insured amount can easily be increased by adding an account from a different category or using another credit union. If a federally insured credit union closes, the NCUA will pay all of its members the insured amount in their accounts within three days. Sometimes, the NCUA may transfer an account to another federally insured credit union rather than directly sending payments to members.
Below, we have compiled a list of accounts that are covered by the NCUA.
|Insured Account Category||Accounts||Maximum Insured Amount|
|Single Ownership Accounts: owned by one member||$250,000 per owner|
|Joint Ownership Accounts: owned by two or more members||$250,000 per co-owner|
|Retirement Accounts||$250,000 per owner|
|Revocable Trust Accounts: one or more beneficiaries designated to receive deposits upon death of owner(s)||$250,000 per owner or beneficiary|
|Irrevocable Trust Accounts: grantor removes rights of ownership to the assets and the trust||$250,000 per beneficiary|
|Accounts held by a Corporation, Partnership or Unincorporated Association||$250,000 per entity|
|Accounts held by Government depositors||$250,000 per official custodian*|
Coverage is subject to specific conditions depending on credit union location, the number of official custodians per public unit and the public unit subdivisions.
Under certain conditions, a credit union member’s insured coverage can exceed $250,000 in total. Depending on the type of accounts you hold, you may qualify for additional insurance. For example, let’s assume you have a personal account, a joint account with your spouse, and a trust for your child at one credit union. Because each account is in a different category, your accounts are insured in total for up to $750,000. Now, let’s assume that you and your spouse decide to open another joint account at the same credit union. Your coverage would stay the same because this new account is in the same category as an account you already hold, your other joint account. But, if you were to open the joint account at another credit union, that would be insured for up to $250,000, which would bring your total coverage across the two institutions to $1,000,000.
So, for every insured account category, co-owner, and credit union, your coverage increases by $250,000. The majority of people don’t keep more than $250,000 in a credit union account but if you do, here are some tips for maximizing your coverage:
- Open accounts in different insured account categories
- Open accounts at multiple credit unions
- Ask if your credit union provides additional coverage from private insurance companies
If your credit union offers non-deposit investment accounts, you can safely assume that they are not backed by the NCUA. The NCUA does not insure such accounts because, when you invest, it’s understood that the investment comes with high risk. Also, robberies and other thefts from the institution are treated differently, and are not covered by the NCUA. Instead, they are covered by a “blanket bond” policy that protects credit unions when they lose funds in cases other than institutional failure. When speaking with a sales representative about credit union accounts, be sure to inquire if the account you’re considering is NCUA-insured. Listed below are accounts that generally do not qualify for NCUSIF coverage.
|Annuities||Life Insurance Products|
NCUA vs. FDIC: What’s the Difference?
The Federal Deposit Insurance Corporation (FDIC) is very similar to the NCUA. The biggest difference between the NCUA and the FDIC is in the type of institution each covers. The FDIC regulates and insures banks while the NCUA oversees federal credit unions. Below, we have listed some key facts about both the NCUA and FDIC. Click here to read more about the FDIC.
|What it is||A federal agency that regulates and insures credit union accounts||A federal agency that regulates and insures bank accounts|
|Who it insures||Members of credit unions||Customers of banks|
|How much it covers||$250,000 per person, per credit union||$250,000 per person, per bank|
|What’s not insured|