Credit union failure is rare, but if it does happen, and if your credit union is backed by the National Credit Union Administration, your deposits are protected.
What is NCUA insurance?
NCUA insurance guarantees that you’ll receive the money that you’re entitled to from your deposit account if your credit union goes under. It guarantees up to $250,000 per person, per institution, per ownership category.
The NCUA is a federal agency created by Congress to regulate credit unions and insure your money. Like the Federal Deposit Insurance Corp., which insures bank deposits, the NCUA makes sure your credit union assets stay secure.
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How NCUA insurance works
The government requires all federally chartered credit unions to carry NCUA insurance. State-chartered credit unions may purchase private insurance to cover deposits, but many opt for coverage through the NCUA. This premium doesn’t come out of your wallet; credit unions cover the cost.
The NCUA insures up to $250,000 per depositor, per institution, per ownership category. “Ownership category” refers to account type, usually single or joint. If you have a single and a joint account at the same institution, both are insured up to the $250,000 limit.
Here’s how similar the NCUA and the FDIC are — and how they keep your money safe:
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| An independent federal agency that insures consumers’ deposits. |
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| $250,000 per person, per institution, per ownership category. |
| Checking accounts. Savings accounts. CDs. Money market accounts. Certain other accounts.
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| Mutual funds. Annuities. Treasury securities. Life insurance policies. Stocks. Bonds.
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Like FDIC insurance, NCUA coverage extends only to deposit accounts: checking, savings and money market accounts and certificates of deposit. Some retirement plans and employee benefit plans are also covered and count as separate ownership categories. Investment losses aren’t covered—even if you purchased the investments through an insured credit union—and neither are the contents of safe deposit boxes.
Here's how to get your money back if your credit union goes under
Before a credit union fails, the NCUA will try to sell its deposits and loans to another credit union. If the sale is successful, customers’ accounts are simply transferred.
If not, the NCUA will send customers a check for the insured balance of their deposits, usually within a few days of a credit union’s closing. The NCUA will notify customers via mail if it requires further action to redeem deposits.
» Looking for a safe place to park your money? Review NerdWallet's list of best savings accounts.
Here are the limits of NCUA insurance — and how to maximize it
Deposits beyond $250,000 aren’t insured, even if they’re in an eligible account, but there’s a way around that: You can distribute your money across different institutions to get coverage. The following example shows how you can maximize your deposit insurance.
| | | NCUA coverage (up to $250,000) |
|---|
| | $200,000 in checking and savings | $200,000 for the joint category $100,000 for the single category |
| $25,000 in checking $75,000 in a money market account | | $100,000 for the single category |
Total funds insured: $400,000 |
Ownership categories, too, can affect how your money is insured. In the example above, you're covered beyond $250,000 at credit union No. 1 because the single-owned CDs are considered one ownership category and the joint checking and savings accounts are considered another.
Choose the options that allow you to protect all of your money.
Next steps for your own peace of mind
Find out whether your deposits are federally insured by searching for your credit union on the NCUA’s credit union locator. If your deposits exceed $250,000, spread your money across multiple banks or credit unions to protect it as much as possible.
When it comes to your money’s safety, both credit unions and banks are solid so long as they’re insured. But there are important differences between credit unions and banks that you should consider if choosing between the two. If you decide on a credit union, here are some of our favorites.
FAQs
The Share Insurance Fund insures individual accounts at federally insured credit union up to $250,000, and a member's interest in all joint accounts combined is insured up to $250,000. The Share Insurance Fund also separately protects IRA and KEOGH retirement accounts up to $250,000.
How good is NCUA insurance? ›
NCUA insurance means that deposit accounts at credit unions are backed by the full faith and credit of the U.S. government up to established limits. “Nobody's ever lost any money or deposit at a federally insured credit union,” said Mike Schenk, chief economist at the Credit Union National Association (CUNA).
Are joint accounts NCUA insured to $500,000? ›
If a couple has a joint money market account, a joint savings account, and a joint share certificate at the same insured credit union, each co-owner's share of the three accounts is added together and insured up to $250,000 per owner, providing up to $500,000 in coverage for the couple's joint accounts.
Does adding a beneficiary increase NCUA coverage? ›
Joint Accounts
Each owner on the account is insured for up to $250,000. Beneficiaries may increase coverage limits.
How to maximize NCUA insurance? ›
By structuring your deposits using different ownership assignments such as single ownership, joint ownership, and revocable family trusts, you can maximize your NCUA insurance coverage.
How long does NCUA have to pay you back? ›
If the member shares are not assumed by another credit union, all verified member shares are typically paid within five days of a credit union's closure. No member of a federally insured credit union has ever lost a penny in insured accounts.
Which is safer, FDIC or NCUA? ›
Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.
Is my money safe with NCUA? ›
All deposits at federally insured credit unions are protected by the National Credit Union Share Insurance Fund, with deposits insured up to at least $250,000 per individual depositor.
What does the NCUA not insure? ›
While the NCUSIF coverage protects members at all federally insured credit unions from losses on a broad spectrum of savings and share draft products, it does not cover losses on money invested in mutual funds, stocks, bonds, life insurance policies, and annuities offered by affiliated entities.
Are credit unions safe from collapse? ›
Credit unions are insured by the National Credit Union Administration (NCUA). Just like the FDIC insures up to $250,000 for individuals' accounts of a bank, the NCUA insures up to $250,000 for individuals' accounts of a credit union. Beyond that amount, the bank or credit union takes an uninsured risk.
Joint bank accounts
Couples may also have joint bank or building society accounts. If one dies, all the money will go to the surviving partner without the need for probate or letters of administration. The bank may need the see the death certificate in order to transfer the money to the other joint owner.
Has the NCUA ever paid out? ›
With this new distribution, the NCUA will have returned more than $2.7 billion to former membership and paid in capital shareholders and more than $360 million in dividends to shareholders.
What happens if you have more than 250k in the bank? ›
The FDIC insures up to $250,000 per account holder, insured bank and ownership category in the event of bank failure. If you have more than $250,000 in the bank, or you're approaching that amount, you may want to structure your accounts to make sure your funds are covered.
Does NCUA cover joint accounts? ›
Each credit union member has at least $250,000 in total coverage. Administered by the NCUA, the Share Insurance Fund insures individual accounts up to $250,000. Additionally, a member's interest in all joint accounts combined is insured up to $250,000.
Does NCUA cover CDs? ›
Accounts insured in NCUA-insured institutions are savings, share drafts (checking), money markets, share certificates (CDs), Individual Retirement Accounts (IRA), and Revocable Trust Accounts.
Is NCUA insurance per account or per person? ›
The standard share insurance amount is $250,000 per share owner, per insured credit union, for each account ownership category. The $250,000 standard share insurance account became permanent through the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. MyCreditUnion.gov/estimator.
What to do if you have more than 250k in the bank? ›
How to Protect Large Deposits over $250,000
- Open Accounts at Multiple Banks. ...
- Open Accounts with Different Owners. ...
- Open Accounts with Trust/POD [pay-on-death] Designations. ...
- Open a CD Account, or Money Market Account, with a bank that offers IntraFi (formerly CDARs) services.
The NCUA is the independent federal agency that administers the National Credit Union Share Insurance Fund. Credit unions that are federally insured by the NCUA offer a safe place for you to save your money, with deposits insured up to $250,000 per individual depositor.
