Understanding The National Credit Union Administration And NCUA Insurance

By Michael Diaz. May 7th 2016

If you belong to a federal credit union, then you might have heard of the National Credit Union Administration (NCUA). However, even if you do belong to a credit union, you may not have a full understanding of what the NCUA is and what its role is within the credit union industry. It is important to get up to speed on the NCUA because it will be your best friend in the event that your credit union goes bust. Read on to find out how the NCUA will protect you from losing your money if your credit union declares bankruptcy.

What Is The NCUA?

The NCUA is an independent federal agency that is tasked with the regulation and supervision of federal credit unions. It is primary regulatory body for all federal credit unions within the United States. It also regulates some state chartered credit unions.

The NCUA is based out of Alexandria, Virginia and is run by a three member board. The members of the board are appointed by the president of the United States and confirmed by the US Senate.

What Does The NCUA Do?

Simply put, the National Credit Union Administration is to federal credit unions what the Federal Deposit Insurance Corporation (FDIC) is to banks. Therefore, the primary responsibilities of the NCUA are:

  • Insuring Deposits At Federal Credit Unions: Through the National Credit Union Share Insurance Fund, the NCUA insures all deposits held at federal credit unions operating in the United States. It also insures the deposits at the majority of state-charted credit unions. Like the FDIC, the NCUA insures up to $250,000 of deposits per account per credit union. In the event that your federal credit union goes out of business, the NCUA will reimburse you for your deposits held up to $250,000.
  • Chartering New Charter Unions: New credit unions that wish to be regulated by the NCUA and benefit from NCUA insurance must be approved and chartered by the NCUA.
  • Helping Credit Unions That Are In Financial Trouble: The NCUA is constantly monitoring the financial health of the credit unions that it regulates. In the event that a credit union falls into financial distress, the NCUA can step in to try to assist the credit union.
  • Performing Damage Control When A Credit Union Goes Under: In the event that a regulated credit union goes out of business, the NCUA is tasked with making sure that the failure remains as isolated as possible. The overall goal is to limit the damage done to the financial industry and the overall economy as a result of the credit union failure.

What The NCUA Insures

Like the FDIC, the NCUA insures standard deposit products held at credit unions. This includes:

What The NCUA Does Not Insure

Products not covered by NCUA insurance mirror those not covered by FDIC insurance. These include:

Please note that this list is not exhaustive. Always make sure to check with your credit union to see what products are covered by NCUA insurance and which ones are not.

How To Ensure Your Credit Union Deposits Are NCUA Insured

Here are some helpful tips to make sure that your deposits are protected in the event your credit union goes under:

  • If you are banking at a federal credit union, then your deposits are NCUA insured since all federal credit unions automatically benefit from NCUA insurance. However, not all state chartered credit unions are NCUA insured. Make sure that your state credit union has NCUA insurance before opening an account. It’s probably not a good idea to bank at an institution without NCUA insurance.
  • Don’t keep more than $250,000 in deposits at any one credit union. If you have more than this in deposits, spread that across multiple credit unions to ensure you are adequately protected.
  • It might be a good idea to do some quick financial research on your credit union before opening an account. Although you will get your money back if the credit union is insured, you can avoid the hassle all together by banking with a financially healthy credit union.

Now that you know what the NCUA is, you can rest assured that your deposits will be protected if your NCUA regulated credit union goes bust. The only thing you need to do is to make sure that your credit union is regulated by the NCUA. Do your homework ahead of time to avoid paying the price if your state credit union closes its doors.


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