Government-backed deposit insurance protects money in deposit accounts in the unlikely event that a bank or credit union fails. Banks are insured by the Federal Deposit Insurance Corporation (FDIC), while credit unions are insured by the National Credit Union Administration (NCUA).
What is the FDIC?
In response to many Americans who lost their life savings when the banks failed during the Great Depression, the U.S. Congress created the FDIC (and its Deposit Insurance Fund) in 1933 to maintain stability and public confidence in the nation’s financial system.
FDIC-insured banks can be found by using the FDIC Bank Find tool or looking for the FDIC signs at the bank or on the bank website.
What is the NCUA?
In 1970, U.S. Congress created the NCUA, an independent federal agency that oversees the National Credit Union Share Insurance Fund (NCUSIF). The federal insurance fund insures deposits at federally insured credit unions nationwide.
Credit unions designated as federal credit unions are automatically insured by the NCUA, however, those who are not are usually chartered and regulated by a state agency and can opt for NCUA insurance. To find what credit unions are federally insured look for the official NCUA insurance logo in the office or website of the institution.
FDIC vs. NCUA Insurance
Deposit insurance normally goes into effect once you open an account covered by FDIC or NCUA insurance. Both types of insurance provide the same type and amount of coverage — $250,000 per insured bank and depositor — with a few minor differences in account coverage and how each entity operates.
Whether you choose a bank or credit union, it’s important to know what types of accounts are insured and not insured. These are the general differences between coverages:
| FDIC | NCUA | |
| Insured Deposit Accounts | Checking and savings accounts Money Market deposit accounts Negotiable order of withdrawal (NOW) accounts Certificate of Deposits (CDs) Individual Retirement Accounts (IRAs) CDs and savings accounts Health Savings Accounts (HSAs) Coverdell Education Savings Accounts (ESAs) Self-directed defined contribution plan accounts such as Self-directed 401(k) plan and Keogh plan accounts. Cashier’s checks Money orders Select prepaid cards from FDIC-backed banks | Checking and savings accounts Money Market deposit accounts Certificates accounts (share certificates and CDs) Individual retirement accounts (IRAs) CDs and savings accounts Health Savings Accounts (HSAs) Coverdell Education Savings Accounts (ESAs) Keogh Plan Accounts |
| Not Insured Accounts | Stocks Bonds Mutual Funds Treasury bills Annuities Life insurance policies Municipal securities Safe deposit boxes or their contents | Stocks Bonds Mutual funds Annuities Life insurance policies Municipal securities Safe deposit boxes or their contents |
Calculating Insurance Coverage
The type of account (see above) and the ownership category are the two factors that determine federal deposit insurance coverage. The most common ownership categories for both banks and credit unions are:
- Single accounts (owned by one person)
- Joint accounts (owned by two or more people)
- Certain retirement accounts
- Revocable trust accounts
- Irrevocable trust accounts
- Employee benefits plan accounts
Normally, accounts that are in the same category are insured up to $250,000 per depositor/owner, per bank or credit union. The FDIC and NCUA provide separate insurance coverage for funds depositors/owners may have in different ownership categories.
Revocable and irrevocable trust accounts are insured up to $250,000 for each eligible beneficiary named per account owner(s), per bank, or credit union.
To confirm if your deposit accounts are fully insured, you can use the FDIC Electronic Deposit Insurance Estimator or NCUA Share Insurance Estimator.
FAQs
What is the FDIC?
The FDIC and its Deposit Insurance Fund provide deposit insurance to maintain stability and public confidence in the nation’s banking system. It was created in 1933 in response to the bank failures of the Great Depression.
What is the NCUA?
The NCUA and National Credit Union Share Insurance Fund (NCUI) have been insuring deposits at federally insured credit unions nationwide since 1970.
How does NCUA insurance differ from FDIC insurance?
NCUA insurance, provided by the National Credit Union Administration, insures deposits in federally insured credit unions, while FDIC insurance covers deposits in banks and thrift institutions.
Disclaimer: This is not intended as tax or legal advice. Please consult your tax advisor or financial planner to understand how these topics may affect your individual financial situation.
