MORE LIKE THISBanking
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.
⏰ Limited-time offer
SoFi Checking and Savings
NerdWallet rating
4.5
/5
Bonus
$400
Limited-time offer
at SoFi Bank, N.A., Member FDIC
Don’t miss out on a bigger bonus
Get a NerdWallet-exclusive bonus of up to $400 when you open an account and hit $5,000 in direct deposits within 25 days after your first one. That’s $100 more than SoFi’s normal $300 bonus! Select "Learn More" to get started. Expires 4/22/24. Terms apply.
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:
FDIC | NCUA | |
---|---|---|
What it is | An independent federal agency that insures consumers’ deposits. | |
Where it applies | Banks | Credit unions |
How much it insures | $250,000 per person, per institution, per ownership category. | |
What's insured |
| |
What's not insured |
|
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.
» MORE: NerdWallet’s best credit unions
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.
Institution | Single accounts | Joint accounts | NCUA coverage (up to $250,000) |
---|---|---|---|
Credit union 1 | $100,000 in CDs | $200,000 in checking and savings | $200,000 for the joint category $100,000 for the single category |
Credit union 2 | $25,000 in checking $75,000 in a money market account | None | $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.
» MORE: How to choose a credit union
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.