Regardless of where you store your hard-earned cash, it’s natural to be concerned about its safety. Thankfully, in the rare instance that a bank fails, up to $250,000 of the funds in your account will be protected as long as the financial institution is FDIC-insured. But what if your deposits are at a credit union? Are you still covered in the unlikely event that it goes under?

Are Credit Unions FDIC-Insured?

The Federal Deposit Insurance Corporation (FDIC) does not insure credit unions, but that doesn’t mean your funds aren’t equally protected at a credit union.

Credit unions are insured by an independent government agency called the National Credit Union Administration (NCUA). While both the FDIC and NCUA protect deposit accounts, the FDIC insures banks, and the NCUA insures credit unions.

All federally insured credit unions are required to display the official insurance sign in their advertising and offices. You can also find the sign at the bottom of their websites. If you’re still unsure whether a credit union is NCUA-insured, visit the agency website for a complete directory of federally insured credit unions.

How Does the NCUA Work?

The NCUA is the independent federal agency responsible for overseeing, regulating and insuring credit unions across the U.S. One of the NCUA’s many responsibilities is managing the National Credit Union Share Insurance Fund (NCUSIF), which provides up to $250,000 in coverage for each single ownership account if a credit union goes belly up.

In the rare case that a credit union fails, the NCUA manages and closes the institution, including liquidating it and returning funds from each account to its owner.

What Does NCUA Insurance Cover?

The NCUA insurance protects depositors at federally insured credit unions. It covers various single-ownership deposit types, including savings accounts, checking accounts, money market accounts and share certificates. It also covers retirement accounts, joint accounts and trusts. The standard insurance amount is typically $250,000 per depositor for each account ownership category.

It’s important to note, however, that NCUA insurance does not cover losses on money invested in mutual funds, stocks, bonds, life insurance policies and annuities offered by affiliated entities, even if you purchased these investments or insurance products at a federally insured credit union.

Which Credit Union Accounts Are Insured by the NCUA?

While the NCUA typically doesn’t protect money invested in mutual funds, stocks, bonds, life insurance policies and annuities offered by affiliated entities, it does cover the following:

Deposit accounts. The NCUA provides all members of federally insured credit unions with $250,000 in coverage for checking, savings, money market and CD accounts. Note that this insurance only applies to account balances totaling $250,000 or less. So if you have $100,000 in your checking account, $200,000 in your savings account and $50,000 in your money market account, you’ve exceeded the insurance limit and could be at risk if the credit union fails.

Retirement accounts. The National Credit Union Share Insurance Fund insures traditional and Roth individual retirement accounts (IRAs) as well as KEOGH retirement accounts up to $250,000 in aggregate. This protection is in addition to insurance coverage on other credit union accounts. In other words, if you have a KEOGH retirement account, an IRA and a checking account with the same federally insured credit union, each account gets separately insured up to $250,000.

Joint accounts. The NCUA provides insurance coverage for joint accounts without beneficiaries. These include checking accounts, savings accounts, money market accounts and share certificates. So, let’s say you and your spouse have a joint account with no beneficiaries at a federally insured credit union. In this case, you and your spouse will receive $500,000 in insurance coverage for the joint account in addition to the protection available for your other individual accounts at the same credit union.

Trusts. The NCUA provides separate coverage, up to $250,000 per beneficiary, for both revocable and irrevocable trusts. However, if a beneficiary has an interest in multiple trusts created by the same owner at the same credit union, the beneficiary’s interests across these accounts will be added together and insured for up to $250,000.

Are Banks or Credit Unions Safer?

Both types of financial institutions are generally secure. Banks are protected by the FDIC, insuring deposits up to $250,000 per depositor, per insured bank, for each account ownership category. The NCUA also offers equivalent coverage limits for credit union members.

When choosing where to deposit your hard-earned cash, it’s best to base your decision on the specific features of a bank or credit union’s products and services. Ultimately, there isn’t much difference between banks and credit unions in terms of safety, so it all comes down to your preferences, priorities and financial needs.

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