NCUA vs. FDIC: When you know how it works, you can “rest insured”

August 31, 2022

By Bill Jacky

NCUA vs. FDIC: When you know how it works, you can “rest insured”

There’s a good chance you have heard the phrase “member FDIC” on TV during a bank commercial or on the radio while driving your car. But what are the chances you know exactly what that means? Generally speaking, “FDIC insured” means a bank’s customers can rest easy knowing the United States government insures the money they’ve deposited in case something impacts the stability of that bank.

Similarly, credit unions are “NCUA insured.” If you’re not as familiar with this acronym, it stands for The National Credit Union Association. But to help you see what NCUA insurance does for those with credit union accounts – and how NCUA’s services are identical to the FDIC’s – let’s breakdown “NCUA” a different, more memorable, way:

No-Worry

Coverage

Up to $250,000 on

Accounts of deposit

Both NCUA & FDIC: No need to worry, your deposits are covered

At traditional banks, your deposits are insured by the Federal Deposit Insurance Corporation (FDIC), an independent branch of the federal government. At credit unions, credit union members' deposits are insured federally by the National Credit Union Administration (NCUA), also an independent branch of the federal government. In short, deposits in both types of institutions are insured by the federal government.

But what does it mean your deposits are “insured?” In the unlikely event that something caused your bank or credit union to go out of business, the federal government makes sure will you will receive the money you’re entitled to from your deposit accounts. (By the way, no member of a federally insured credit union has ever lost one penny of insured savings.)

“Depositing cash in a credit union or bank builds consumers’ savings, but the NCUA and FDIC builds their confidence,” says Chris Moore, director of deposits at Alliant. “When Americans know their funds are insured by their government, they remain reassured and upbeat, and won’t pull their money out when they read the occasional bad headline about the economy.”

Both NCUA & FDIC: Up to $250,000 of coverage

So how much will the government insure your deposits? For both the NCUA and FDIC, it’s the same amount of money, up to $250,000. At Alliant, you are insured up to $250,000 in combined balances for savings, checking and certificates, per Social Security Number, per membership. However, there are a few ways to get more NCUA coverage. Here’s how you can estimate your own coverage.

Both NCUA & FDIC: Types of accounts insured

You may find it helpful to know what type of accounts qualify for FDIC or NCUA insurance and which ones don’t. Accounts the government insures are deposit accounts including checking, savings, certificates of deposit, trust accounts, custodial accounts as well as traditional and Roth IRAs that do not have an investment component.

What kind of accounts don’t FDIC or NCUA protect? Stock investments, bond investments, mutual funds, life insurance policies, annuities and other fund with investment components.

NCUA vs. FDIC: So, what’s the difference?

The main difference between the NCUA and the FDIC is, of course, the financial institutions they serve. “Banks follow a for-profit business model while credit unions are built upon a cooperative model,” says Chris Moore. “Very different priorities! But both are still regulated to ensure their stability and protect consumers.”

Simply put, credit unions are not-for-profit financial institutions that are owned by the people who use their products and services (aka members). And for this reason, credit unions work for their members to provide a better deal. Banks are in the business of making money from their customers; credit unions take pride in serving their members’ best interests.

Likewise, the National Credit Union Association is proud of their vision statement, stating their goal is to “Strengthen communities and protect consumers by ensuring equitable financial inclusion through a robust, safe, sound and evolving credit union system.”

Credit unions are active in their communities. Members come first, which means members’ communities also come first. For example, Alliant Credit Union has a mission to bridge the digital divide by increasing internet, device and digital skills training access. The Alliant Credit Union Foundation also invests in local community organizations and provides grants to a variety of charities.

Alliant has stood financially strong since 1935. And our members rest even easier, because their money is federally protected by the NCUA. The NCUA’s credit union locator can confirm which institutions are NCUA-backed; likewise, the FDIC can help you confirm if a bank if FDIC insured.