How does NCUA insurance work at a credit union?

The National Credit Union Administration oversees federal credit unions.

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The NCUA is a government agency that insures deposits at credit unions so that your money is safe should the institution shut down.
An individual account that is federally insured by the NCUA is secure for up to $250,000.
A credit union that’s federally insured will have a NCUA sign on the website or building.
Read Insider’s guide to the best credit unions »

When you open an account at a financial institution, you want to ensure that your money will be safe, regardless of current or future circumstances. With the ongoing coronavirus pandemic, this sentiment is even more important. If something unexpected happens – your branch closes, something in your life affects your personal finances – you still need a reliable place to save your money.

The Federal Deposit Insurance Corporation, or FDIC, will protect your money even if a bank shuts down. Credit unions federally insured by the National Credit Union Administration, or NCUA, will also be secure.

What is the NCUA?

The NCUA is a government agency that oversees federal credit unions. The NCUA controls the National Credit Union Share Insurance Fund, or NCUSIF, which is a fund by all participating credit unions. The NCUSIF insures accounts at federal credit unions and is backed by the government.

According to the NCUA, the NCUSIF insures about 98% of all credit unions in the US. Therefore, credit union members will likely already have accounts that have NCUSIF protection.

What does it mean to be “federally insured by the NCUA?”

On a credit union’s building or website, you may see that it is “federally insured by the NCUA.”

This wording is letting you know that money in your account is in a safe spot. Through the NCUSIF, money in individual or joint accounts is secure even if a credit union shuts down.

Accounts protected by federal share insurance include:

Savings (or share) accountsChecking (or share draft) accountsMoney market accountsShare certificatesTraditional IRAsRoth IRAsKEOGH retirement accountsRevocable trust accountsIrrevocable trust accounts

Keep in mind that while IRAs are covered, the NCUA does not insure brokerage accounts. Money that’s invested in stocks, bonds, or mutual funds isn’t secure even if these products are directly from a federally insured credit union. A credit union has to tell its members if a specific product isn’t federally insured, so you’ll know what is guaranteed by the credit union and what isn’t.

Why is federal share insurance important?

Federal share insurance is crucial because it guarantees that money in your account is protected regardless of what happens. The NCUA routinely reviews how federal credit unions work, so they don’t often shut down.

However, in case a credit union fails, you won’t lose a penny of your money. If your credit union closes, the NCUA will transfer your money to another credit union that’s federally insured.

In the event that it can’t transfer money to another credit union, you’ll get a check of the money that was in your account through the mail a few days after the credit union’s closure. Either way, your money won’t be gone if something bad happens.

How much does the NCUA insure?

Federally insured credit unions will have up to $250,000 secure in an individual account. If you are part of a joint account, then you can have $250,000 protected per owner for $500,000 total.

It’s possible to have more than $250,000 secure at one credit union if the accounts are in separate ownership categories. Ownership categories are split into the following groups:

Individual owner accountsJoint accountsTraditional IRAs, Roth IRAs and KEOGH accountsRevocable trust accountsIrrevocable trust accounts

Let’s say you have $250,000 in an individual account and another $350,000 in a joint account. If your bank were to shut down, then all $600,000 would still be federally insured.

If you prefer to have all of your money in one ownership category, you can also choose to deposit your money in more than one credit union.

For example, you could have a savings account with $250,000 at one credit union and another $250,000 in a CD at another credit union. Your two accounts would still be federally insured.

How do I know if my credit union is federally insured?

Credit unions federally insured by the NCUA will have a sign at every branch near the tellers. If you’re visiting the website, the sign will usually be at the bottom of the homepage.

The NCUA keeps a database of federally insured credit unions. If you search the address, credit union name, or charter number on this database, you can double-check to see if it’s federally insured.

You can also use the NCUA’s Share Insurance Estimator if you want to know how share insurance rules apply based on your circumstances.

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