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Federally Backed Finances: The NCUA, Credit Unions & You

By: American Heritage10.12.23
Closeup of a man's hands while he holds his open wallet

When compared to other financial institutions, credit unions are the masters of keeping members’ funds secure and stable. This is due in no small part to the National Credit Union Administration, which regulates credit unions and provides insurance for member deposits. But what exactly does that mean, and how does it compare to the safeguards in place for banks?

We’ve got answers for everything you need to know about the NCUA and NCUA insurance so that you can better understand how credit unions keep your finances secure.


What Is the NCUA?

Where banks have the Federal Deposit Insurance Corporation (FDIC), credit unions have the National Credit Union Administration. Established in 1970, the NCUA is an independent federal agency that regulates, supervises, and insures all federal credit unions and virtually all state-chartered credit unions throughout the country. Its goal is to ensure the safety and soundness of the credit union system by establishing standards and regulations that maintain the financial health of credit unions – and to protect members’ deposits through the National Credit Union Share Insurance Fund (NCUSIF).

In short, the NCUA plays an essential role in ensuring that credit unions operate with integrity and stability, in accordance with the best interests of their members.


What Is NCUA Insurance?

NCUA insurance is provided through the NCUSIF, which is backed by the full faith and credit of the U.S. government. If a credit union were to fail, NCUA insurance would help shelter members’ insured savings and deposits from the impact. In this way, members of NCUA-insured credit unions can have peace of mind that their finances are secure.

There are limits to the protection offered by the NCUA, but the majority of credit union members fall within those limits. Currently, the NCUSIF can cover up to $250,000 per depositor, per insured credit union, for each account type.

That means if you have a checking account and an individual retirement account at the same credit union, each account would be eligible for $250,000 in coverage, providing $500,000 in total protection. Understanding this can help you strategize how you allocate your money between accounts at your credit union.

To better understand your exact NCUA coverage, you can calculate it online.


5 Benefits of NCUA Insurance for Credit Union Members

Banking at a federally insured credit union has clear advantages.


1. Protection Against Losses

The most significant benefit of banking at an NCUA-insured credit union is the peace of mind in knowing your money is safe. In the unlikely event that an insured credit union fails, the NCUA will step in and make sure that members don’t lose their insured funds. Since the NCUA’s establishment, not a single penny of insured savings has been lost by a federally insured credit union.


2. Backing From the U.S. Government

The NCUSIF is fully backed by the United States government, adding an extra layer of security for members.


3. Financial Stability

The NCUA only insures credit unions that align with their established standards and regulations and are well-managed. This means that NCUA-insured credit unions are generally more stable and much less likely to fail than a non-insured financial institution. Plus, insured credit unions are more likely to adopt and maintain sound financial practices to keep that insurance for their members, especially with the knowledge that they are being overseen by a federal entity.


4. Strategized Account Structuring

Because each account category is separately insured, members can maximize their insurance coverage by structuring their accounts across different categories so that each account balance stays below $250,000 and remains fully insured. This allows you to protect larger sums of money without paying for additional protection.


5. No Direct Cost to Members

NCUA insurance is provided to credit union members at no additional cost. Credit unions contribute directly to the NCUSIF to make sure their members’ deposits are insured without direct fees or charges passed along to the members.


Other Ways Credit Unions Keep Your Finances Safe

NCUA insurance is a pivotal part of the safety, security, and stability that credit unions are able to provide their members, but it’s not all they offer. At a foundational level, credit unions are community- and member-focused. Unlike banks, they are member-owned, and their primary goal is to benefit the community or population they serve. Because of this, credit unions often reinvest profits back into themselves, leading to lower fees on services like account maintenance, overdrafts, and ATM usage, helping members save over time.

This also tends to lead to more affordable and improved services for members. Credit unions commonly offer better rates on savings and investment accounts, so members get better returns. Financing options from credit unions also often have competitively low interest rates, making borrowing more affordable for members.

Beyond that, credit union employees are people just like you from your community, focused on providing valuable services. You can generally expect more personalized, friendly service from credit unions, as staff can often relate to your situation, understand your unique needs, and want to support your financial goals for no reason beyond seeing you succeed. Banking with a credit union means you can trust that they truly have your back.


Savor Security With American Heritage

Member-owned, community-focused, insured by the NCUA – many features of credit unions offer tangible benefits for members. At American Heritage Credit Union, we are no different. Whether you want better savings rates or more competitive financing options, we promise to deliver valuable products and exceptional services to meet your needs.  



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