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.
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
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.
How does NCUA coverage work? ›
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.
Are joint accounts NCUA insured to $500,000? ›
The NCUSIF provides each joint account holder with $250,000 coverage for their aggregate interests at each federally insured credit union. For example, a two person joint account with no beneficiaries has $500,000 in coverage.
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 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.
Is NCUA safer than FDIC? ›
One of the only differences between NCUA and FDIC coverage is that the FDIC will also insure cashier's checks and money orders. Otherwise, banks and credit unions are equally protected, and your deposit accounts are safe with either option.
How much does NCUA cover per beneficiary? ›
Irrevocable trust accounts: Each owner (so long as all owners OR all beneficiaries are members of the credit union) is insured up to $250,000 for each beneficiary named or identified in the irrevocable trust, subject to specific limitations and requirements.
Where do millionaires keep their money if banks only insure 250k? ›
Millionaires don't worry about FDIC insurance. Their money is held in their name and not the name of the custodial private bank. Other millionaires have safe deposit boxes full of cash denominated in many different currencies.
Is it safe to have more than $250000 in a bank account? ›
An account that contains more than $250,000 at one bank, or multiple accounts with the same owner or owners, is insured only up to $250,000. The protection does not come from taxes or congressional funding. Instead, banks pay into the insurance system, and the insurance provides their customers with protection.
How to safely store deposits if you have more than $250000? ›
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.
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.
How strong is NCUA insurance? ›
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.
Are non-member deposits insured by NCUA? ›
NCUA's share insurance regulations define member accounts to include "those nonmembers permitted under the [FCU] Act to maintain accounts in an insured credit union, including nonmember credit unions . . .." 12 C.F.R. §745.1(b). If properly maintained, the corporate's account up to the current $100,000 limit.
What is the NCUA 72 hour rule? ›
A federally insured credit union that experiences a reportable cyber incident must report the incident to the NCUA as soon as possible and no later than 72 hours after the credit union reasonably believes that it has experienced a reportable cyber incident.
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. Credit union members have never lost a penny of insured savings at a federally insured credit union.
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.
What to do if you have more than 250k in the bank? ›
How to Insure Bank Deposits Over $250,000
- Open an Account at a Different Bank. FDIC coverage limits are per bank. ...
- Add a Joint Account Owner. ...
- Split Funds Between Ownership Categories. ...
- Use a Network Bank.
The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. Deposits held in different ownership categories are separately insured, up to at least $250,000, even if held at the same bank.
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.
