NCUA Insurance: What You Need to Know

Perhaps you’ve heard of the Federal Deposit Insurance Corporation (FDIC), which provides account insurance for bank customers. Credit union members are eligible for the same account coverage through the National Credit Union Association (NCUA). And members who understand how NCUA insurance safeguards their money can rest easy—even when headlines scream about a bank or credit union failure.

Here are the answers to some fundamental questions about NCUA insurance—and how this financial “seatbelt” can protect you in case of a smashup.

What Is the NCUA?

The NCUA is a government agency that provides oversight for federally insured and most state-chartered credit unions. The agency’s role includes managing the National Credit Union Share Insurance Fund (NCUSIF), which guarantees against loss for up to $250,000 deposited into certain credit union accounts. The NCUA does not compete with the FDIC as the same protections exist regardless of which type of financial institution you choose for depositing funds.

How Does the NCUA Safeguard Your Deposits?

The NCUA insures your credit union deposits. That means if your credit union fails, the NCUA will step in to ensure you can access the money you’ve deposited into NCUA-insured accounts. The agency works to make sure members receive their funds within five days of the credit union’s permanent closure. The coverage limit of $250,000 applies to each credit union member for each applicable account category.

Which Accounts Are (and Are Not) Covered by NCUA Insurance?

Understanding the limits of NCUA insurance is crucial so you can plan your deposits in a way that supports your financial goals. The basic coverage limit of $250,000 applies to all members, but not to all ownership types and account categories. NCUA-insured ownership types include single accounts (owned by one person) and joint accounts (owned by two or more people). Some common NCUA-insured account categories include:

•              Checking accounts
•              Savings accounts
•              Money market accounts
•              Share certificates/Certificates of Deposit
•              Trust accounts
•              Individual retirement accounts
•              Employee benefit plan accounts

These accounts, however, are ineligible for NCUA insurance:

•              Annuities
•              Bonds
•              Stocks
•              Mutual funds
•              Life insurance

How Can You Maximize Your NCUA Coverage?

Let’s say you have a single-owner checking account and a single-owner money market account, each with a balance of $250,000. Despite being different accounts, both are in the same ownership category, so the total deposit of $500,000 is not covered. Only $250,000 of your money is insured.

If you have more than $250,000 deposited at a single financial institution, consider spreading funds across different ownership categories. For example, if the checking account was jointly owned with another member, the total funds would fall below the maximum NCUA insurance threshold, and you would be fully covered. So the easiest way to maximize coverage is to open accounts of different ownership types. Use the Share Insurance Estimator to calculate coverage based on account type and balance.

Now that you’re safely buckled up with greater knowledge about NCUA insurance, sit back and relax knowing your funds are safe at Credit Union of Colorado, an NCUA-insured financial institution. Or, if you’d like to increase your NCUA coverage, open a new account in a different ownership category here.