What Are the Differences Between FDIC and NCUA Insurance?
The Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) are independent federal agencies that insure their customers’ deposits. The FDIC insures deposits at banks typically up to $250,000 (though there are exceptions); the NCUA offers the same insurance and consumer protection but at credit unions.
Account holders don’t have to apply or qualify for this coverage; it comes with different deposit accounts, assuming the institution is a FDIC or NCUA member. The coverage is meant to cover deposits if the institution were to fail; it doesn’t cover investment products or losses.
While these two entities serve similar purposes for consumers, they operate a little differently. Read on to learn more.
Key Points
• The FDIC and NCUA are government agencies that insure deposits at banks and credit unions, respectively.
• FDIC stands for the Federal Deposit Insurance Corporation, and NCUA stands for National Credit Union Administration.
• Both agencies typically provide insurance coverage of up to $250,000 per insured financial institution, per depositor or share owner, per account ownership category.
• FDIC and NCUA insurance covers various types of accounts, such as checking, savings, money market, and certificates of deposit. Insurance coverage does not extend to investment products, stocks, bonds, mutual funds, annuities, life insurance policies, or safe deposit boxes.
• It is important to verify if a financial institution is insured by the FDIC or NCUA before opening an account to ensure deposit protection.
What Is the FDIC?
The Federal Deposit Insurance Corporation (FDIC) is over 90 years old. President Franklin D. Roosevelt established the Federal Deposit Insurance Corporation when he signed the Banking Act of 1933 amid the Great Depression.
The main purpose of the FDIC is to “maintain stability and public confidence in the nation’s financial system.” As part of that remit, the FDIC insures consumer deposits and is “backed by the full faith and credit of the United States government.”
The FDIC insures $250,000 per depositor, per insured bank, per account ownership category. “Account ownership category” refers to single account holders, joint accounts, and other accounts like revocable and irrevocable trusts. (See table below.)
If you are a person who keeps a considerable amount of money in a bank, whether in checking or savings accounts, you’ll likely want to know that some banks participate in programs that extend the FDIC insurance to cover millions, usually by dividing the assets into holdings of no more than $250,000 each among separate banks.
According to the FDIC, a depositor has not lost a single penny of FDIC-insured deposits because of a bank failure.
What Is the NCUA?
NCUA stands for National Credit Union Administration. Though the first credit union opened in the United States in 1909, and there were nearly 10,000 credit unions in the U.S. by 1960, Congress did not create the National Credit Union Administration until 1970.
Like the FDIC, the purpose of the NCUA is to insure deposits made by credit union members and protect those members who own credit unions. (Credit unions are not-for-profit and are owned by the members.)
Also like the FDIC, the NCUA is “backed by the full faith and credit of the United States government,” and insures deposits up to $250,000 per share owner, per insured credit union, for each account ownership category, share accounts, and some IRAs and trusts.
Rivaling the FDIC’s track record, the NCUA states that no member has ever lost a cent from accounts insured through the NCUA.
All federally chartered credit unions are a part of the NCUA while state-chartered credit unions adhere to state-specific regulations. That said, many state-chartered credit unions are also insured by the NCUA.
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FDIC vs NCUA Insurance: Similarities and Differences
So what’s the difference between the FDIC and NCUA? The biggest difference regarding FDIC vs. NCUA is the customers they protect. The FDIC insures deposits for bank customers while the NCUA insures deposits for credit union members. As a customer of a financial institution, you will not likely notice a difference in your day-to-day banking.
In fact, it may be easier to talk about all the ways the FDIC and NCUA are similar. The table below explores these similarities (and minor differences).
| FDIC | NCUA | |
|---|---|---|
| Year Created | 1933 | 1970 |
| Applicable Financial Institution | Banks | Credit Unions |
| Insurance Amount | $250,000 per depositor, per insured bank, for each account ownership category | $250,000 per share member, per insured credit union, for each account ownership category |
| What Is Insured | Checking accounts Savings accounts Money market accounts Time deposits (like CDs) Other deposit accounts | Share draft (checking) accounts Share savings accounts Money market accounts Certificate accounts (like CDs) Other deposit accounts |
| What Is Not Insured | Stocks Bonds Mutual funds Annuities Treasury securities Life insurance policies Safe deposit boxes (or contents) | Stocks Bonds Mutual funds Annuities Life insurance policies Safe deposit boxes (or contents) |
| Ownership Types | Single ownership Joint ownership Revocable trust account Irrevocable trust account Certain retirement accounts (like IRAs) Employee benefit plan accounts Corporation/Partnership/Unincorporated Association Accounts Government Accounts | Single ownership Joint ownership Revocable trust account Irrevocable trust account Certain retirement accounts (like IRAs, KEOGHs) Employee benefit plan accounts |
What Does NCUA Coverage Protect?
NCUA coverage comes from the National Credit Union Share Insurance Fund (NCUSIF). The following account types are insured via the NCUSIF:
• Share draft accounts (checking accounts)
• Share savings accounts
• Money market deposit accounts
• Share certificates (like certificates of deposit)
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What Isn’t Covered by NCUA?
If your credit union carries insurance through the NCUA, you can depend on coverage up to $250,000 for common accounts like a checking or savings account. However, NCUA insurance does not cover:
• Stocks
• Bonds
• Annuities
• Life insurance
• Safe deposit boxes (or their contents)
What Does FDIC Coverage Protect?
Insurance through the FDIC covers account types that are comparable to those covered by the NCUA, but it’s for those held at most traditional or online banks vs. credit unions:
• Checking accounts
• Savings accounts
• Money market deposit accounts
• Time deposits (like certificates of deposit)
The FDIC also notes that its insurance covers Negotiable Order of Withdrawal (NOW) accounts, cashier’s checks, money orders, and other local items issued by a bank.
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What Isn’t Covered by FDIC?
The FDIC has coverage exclusions similar to those of the NCUA. Insurance through the FDIC does not extend to:
• Stocks
• Bonds
• Mutual funds
• Annuities
• Treasury securities
• Safe deposit boxes (or their contents)
Treasury securities like bills, bonds, and notes are, however, “backed by the full faith and credit of the U.S. government.”
How to Know if Your Institution Is Insured by the FDIC or NCUA
Because the FDIC and NCUA insure deposits up to $250,000 for checking and savings accounts (some external programs allow for higher insurance limits with the FDIC), it’s important to know when selecting a new financial institution that it is insured by one of the two organizations.
So how do you know if a bank is insured by the FDIC? The FDIC provides a few easy options:
• Call and ask. Calling the FDIC is toll-free. You can reach them at 1-877-275-3342.
• Search online. The FDIC has a database called BankFind that allows you to search for insured banks.
• Look for the sign. When you enter a brick-and-mortar (aka physical) bank location, look for official FDIC signage.
• Search the bank’s website. If you fall on the digital side of the traditional vs. online banking debate, you can scour a bank’s website instead. Usually you can find language like “Member FDIC” in the footer if the bank is insured.
Determining whether a credit union is insured by the NCUA is just as easy:
• Check online. Visit the NCUA’s agency website to search a complete directory of federally insured credit unions.
• Look for the sign. Similar to the FDIC, the NCUA requires federally insured credit unions to place NCUSIF signage in their advertisements, offices, and branches to indicate insurance coverage.
• Search the credit union’s website. Credit unions that are federally insured will include NCUA verbiage in the footer of their websites, just like banks do for the FDIC.
Remember, some state credit unions may not be federally insured. A credit union that includes “federal” in its name should automatically be insured by the NCUA. If you aren’t sure about a state credit union’s insurance, you can ask a credit union representative on site or over the phone for more information.
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Are All Banks FDIC Insured?
Most banks are FDIC insured — but not all of them. Any bank that is not insured federally through the FDIC likely carries insurance through its state, so your deposits are typically still safe. However, it is a good idea to thoroughly research a bank and its insurance policies before storing any money in an account at the institution.
Are All Credit Unions NCUA Insured?
Not all credit unions are NCUA insured. All federal credit unions are automatically insured by the NCUA, but state credit unions must opt into NCUA share insurance. Those that don’t are typically insured through the state. As with banks, it is a good practice to understand a credit union’s insurance status and how it can affect your money before opening any account.
How to Maximize FDIC and NCUA Insurance
Both the FDIC and NCUA are typically very clear on how much they insure — $250,000 — careful to use specific terminology like “per depositor” or “per share owner”; “per insured bank” and “per insured credit union”; and “for each account ownership category.”
Knowing that, there are a few ways you can maximize your insurance coverage:
Find a Program That Insures for More Than $250,000
As briefly noted above, some banks offer programs that allow depositors to insure their account for more than the usual $250,000 amount, typically by dividing assets into $250,000 chunks or less and holding those at different banks within a participating network. Check with financial institutions to see what may be available that can extend your account insurance to cover millions.
Open Accounts at Multiple Financial Institutions
You receive $250,000 of insurance coverage at each institution with applicable accounts. That means you could open up accounts at multiple banks and credit unions, spread your wealth across those accounts, and wind up with coverage on much more than $250,000.
Use Account Ownership Categories to Your Advantage
Another way to maximize FDIC and NCUA insurance is to utilize multiple account ownership categories. For example, at one bank, you could have a single ownership certificate of deposit with $200,000 and share a joint savings account holding another $200,000 with a partner. Even though you’d be above the $250,000 threshold, these separate account ownership categories each qualify for the max insurance coverage.
Open Accounts for Various Family Members
You, your spouse, and your children could each open a single ownership savings account at the same bank and each deposit $250,000 in your own account. Because each account has a different depositor, each is protected fully for $250,000.
Consider a Revocable Trust
If you and a partner want to put money together and save it as a potential nest egg for a family member, you can create a revocable trust (a type of trust fund). Then you can name beneficiaries for that money should you and the other account owner die. For each beneficiary, the account is insured for $250,000. If you name three beneficiaries, you can deposit $750,000, and it will all be insured.
The Takeaway
The FDIC (Federal Deposit Insurance Corporation) and NCUA (National Credit Union Administration) are government agencies that protect consumers’ deposits at banks and credit unions. The two agencies operate similarly and protect the same kinds of accounts, typically up to $250,000 per account holder, per account ownership category, per insured institution. The key difference? The FDIC only insures money at banks while the NCUA only insures credit unions. Most financial institutions have one of these types of insurance.
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FAQ
What does the NCUA not cover?
The National Credit Union Share Insurance Fund, which operates under the NCUA, does not cover stocks, bonds, mutual funds, annuities, life insurance policies, or safe deposit boxes and their contents.
How are the FDIC and NCUA similar?
Both the FDIC and NCUA are government agencies created by Congress to insure consumers’ deposits, including savings accounts, checking accounts, and CDs, up to $250,000 per person, per financial institution, and for each account ownership category. The main difference between FDIC and NCUA is that the FDIC insures banks and the NCUA insures credit unions.
Why are credit unions not FDIC-insured?
Credit unions are not FDIC-insured because the FDIC insures banks. Federal credit unions (and many state credit unions) are instead insured by the NCUA.
How much of your money is protected by FDIC or NCUA?
The FDIC insures $250,000 per depositor, per insured bank, for each category of ownership. In theory, you could have more than $250,000 across different account types at different FDIC-insured banks, and it would all be insured by the FDIC.
The same is true of the NCUA. The NCUA insures $250,000 per share owner, per insured credit union, for each category of ownership.
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