NCUA Insurance Is As Good As FDIC Insurance
I have never used a credit union before, therefore, I never paid any attention to how money is insured in a credit union. I just assume that there some some kind of measures to protect credit union customers again losses if a CU fails, like the way my deposits at banks are protected by the FDIC insurance.
Actually, that IS how things work at credit unions, federal and most state-chartered alike. Though not backed the same agency, deposits at credit unions are insured by the U.S. government to the same amount that deposits are guaranteed at banks.
Insured By National Credit Union Administration
The government agency that guarantees the safety of your deposits at a credit union is National Credit Union Administration (NCUA). NCUA was created by 1970 to oversee more than 10,000 federal credit unions across the country at that time. Currently, “there were 8,101 federally insured credit unions with nearly 87 million members and total assets of $753.5 billion and loans of $526.9 billion” (Wikipedia). NCUA is backed by the full faith and credit of the government of the United States.
Maximum Amount Insured by NCUA
NCUA operates the National Credit Union Share Insurance Fund (NCUSIF). Like the FDIC Deposit Insurance Fund, NCUSIF provides insurance for savings at its member credit unions (98% of credit unions across the country, including all federal credit unions, are members of NCUA) against failure of a member union (so far in 2008, 8 NCUA insured credit unions have failed). Like bank accounts, accounts at NCUA member credit union is insured to a maximum of $250,000 as of October 3, 2008. The insurance coverage will good till December 31, 2009. The standard insurance amount is $100,000 per individual account.
NCUA Insurance Estimator
NCUA provides a free insurance estimator, The Electronic Share Insurance Calculator (E-SIC) to let you estimate the amount you are insured, depending on the types of accounts you have at a credit union. This is more like the EDIE estimator from the FDIC. Both are good tools if you have multiple accounts at a credit union or a bank and are confused by the combined insurance limit of all your accounts.
Make Sure It’s NCUA Insured
Before you decide to use a credit union (some credit unions offer better products than banks do, such as better rates and services), make sure it is NCUA insured for your own safety. You can use NCUA’s credit union locator to find the member unions in your area. Also be sure to check whether the credit union displays the official NCUA insurance sign (above). If not, then just don’t use it even if it promises 20% return of your money. It’s just not worth it official NCUA insurance sign
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