Before you move money into a credit union, check one thing: is it insured by the NCUA? The answer takes a few minutes. The check has four parts, and the two short lists below cover them.

  1. Confirm the credit union is federally insured, whether it holds a federal or a state charter.
  2. Confirm your money sits in share deposit accounts, not investment products.
Desk with reading glasses, folded documents, and a brass lamp, representing review of credit union deposit protection records.
Reading glasses, folded documents, and a brass lamp on a desk: the kind of setup where account statements and titling records get checked.

The second pair of steps is about your own balances.

  1. Sort your balances by ownership type, such as individual, joint, trust, or retirement.
  2. Run those balances through the official estimator to spot anything above the limits.

What NCUA insurance covers and who provides it

The National Credit Union Administration, or NCUA, is an independent federal agency created by Congress in 1970. It insures deposits at federally insured credit unions through the National Credit Union Share Insurance Fund, or NCUSIF. The fund is backed by the full faith and credit of the United States. It covers all federal credit unions and the vast majority of state-chartered ones.

The fund aims to hold at or near 1.30 percent of insured deposits. Credit unions keep 1 percent of their deposits in the fund, and the NCUA Board can charge a premium if it needs to. If an insured credit union fails, the NCUSIF covers each member's balance dollar for dollar up to the limit. That includes principal and posted dividends through the failure date. Insured funds have historically been available within a few days of a closure.

Coverage applies to deposit products. Those are regular share accounts, share draft (checking) accounts, money market share accounts, and share certificates. It does not apply to stocks, bonds, mutual funds, annuities, or life insurance policies. That holds even when a credit union sells them to you. A mutual fund bought at a branch counter is still a mutual fund.

How to confirm a credit union is federally insured

Start with the question that matters most: is this institution federally insured? The coverage rules apply only to shares at a federally insured credit union. If the institution is not in the fund, the NCUA's rules and its estimator do not apply to your balance.

The NCUA's share insurance page is the place to begin. Its coverage materials point to a credit union locator, though the sources reviewed here do not spell out how to look up a single institution by name. If the lookup is unclear, call the NCUA Consumer Assistance Center at 1-800-755-1030. You can also ask the credit union directly whether it is federally insured by the NCUA, and ask for the answer in writing.

A small number of state-chartered credit unions may be insured some other way. The sources here do not say how to verify insurance outside the NCUSIF, so do not guess. If a credit union says it is not NCUA-insured, ask who its insurer is and what that insurer covers. Then decide whether you are comfortable with the answer.

How coverage limits work, with an example

The standard limit is $250,000 per individual depositor, by ownership category. The share insurance coverage overview explains that balances in the same category at the same credit union are added together. Opening a second savings account in your own name does not double your coverage.

  • Individual accounts: All single-owner accounts are combined and insured up to $250,000.
  • Joint accounts: Each owner's interest is insured up to $250,000.
  • Trust accounts: Coverage is up to $250,000 per beneficiary, per owner. Special rules apply above $1.25 million.
  • Retirement accounts: Traditional and Roth IRAs and Keogh accounts are insured up to $250,000.

Here is a concrete case. Say one person holds $400,000 in a single savings account at one credit union. Only $250,000 is insured, so $150,000 is exposed. Now say that person and a spouse hold the same $400,000 in a joint account with equal rights. Each owner's interest is $200,000, which is under the limit for each, so the full balance is within coverage. This is a simplified illustration. Your own result depends on how the accounts are actually titled.

Using the Share Insurance Estimator and asking the right questions

The Share Insurance Estimator is a calculator for share accounts at a federally insured credit union. You enter the credit union name, choose a personal, business, or government account, give each account a nickname, and enter a whole-dollar balance. Then you select the ownership type. If beneficiaries are named, you choose the ITF/POD or living trust option.

The tool has limits. It handles up to 50 accounts from one credit union and joint accounts with up to 10 owners. It also handles revocable trusts with up to three owners and 20 beneficiaries. It cannot calculate irrevocable trusts, employee benefit plans, or revocable trusts with unequal beneficiary shares. For those, call the NCUA at 1-800-755-1030. The estimator is based on rules in effect as of May 2013 and was released in January 2014. The sources say it is updated when rules change, but they do not say whether it has been updated since 2014. Confirm the current limit on the NCUA site.

Before you deposit, three questions are worth asking:

  1. Is this credit union federally insured by the NCUA?
  2. How are my accounts titled, and how much sits in each category?
  3. Do I hold any revocable trust with unequal beneficiary shares?

If the answers are clear and written down, you are done. If they are vague, treat that as a reason to keep asking.

Please seek a professional. This article is general information, not financial, tax or insurance advice. Please seek a licensed financial, tax or insurance professional about your own situation.