FDIC vs. NCUA Insurance

The Difference between FDIC and NCUA Insurance

When it comes to Credit union and bank Deposit Insurance, people often confuse FDIC with NCUA and vice versa. It can’t be helped; after all, they both are insurers of the deposits in banks or credit unions. To keep their money guarded and safe for a specified period of time or whenever they need it, the public has to two options: It’s either the bank or a Credit Union. People have the following criteria in the selection of where to keep their cash: safety, interest rates, accessibility, and finally, customer service.

The FDIC was first established in 1933 by the government to safeguard costumer deposits in banks and covers ALL types of customer accounts whether they are Current, Savings, CDs, or Money market Accounts and is backed up by the federal government. However, the insurance granted by this institution has a maximum limit per depositor. This means that any amount beyond this limit is no longer covered by the FDIC, and is thus unprotected and vulnerable. As of press time, the limits set by the FDIC are as follows:

 

  1. Single account: $250000 per owner
  2. Joint account: $250000 per co-owner
  3. Certain retirement accounts: $250000 per owner

 

Aside from the maximum limit, there are also certain exceptions to the kinds of products and services that FDIC covers; therefore, it is very important and wise for one to check if FDIC covers the financial product you are utilizing. Some of the products and services may include T- Bills, insurance products and annuities, bonds, stocks, and money market assets. In addition, FDIC does not insure all banks so it is prudent to first assess if the bank you are interested in is FDIC insured.

If banks have FDIC, Credit Unions have NCUA. With the public’s incessant need for convenience through the use of Credit Unions, the government has set up another institution with the full government backup called National Credit Union Administration. This institution monitors and insures all accounts under Credit Unions and also runs National Credit Union Share Insurance Fund. Similar to FDIC, NCUA has a maximum limits and may not cover shares, annuities, mutual funds and the like.

FDIC and NCUA are different not only in the agencies and services they cover. FDIC, unlike NCUA, is that it extends to share and draft accounts. Also, FDIC is more familiar with the public since banks are often utilized by people to care for their finances. However, Credit Unions are rapidly gaining in popularity with the increasing number of failing banks thus making more and more individuals aware of NCUA. Credit Unions may be smaller compared to banks, but the safety of the deposits in these institutions is equal to that of banks.