NCUA vs FDIC: What’s the Difference?

The National Credit Union Administration (NCUA) provides federal insurance for deposits made at credit unions, and the Federal Deposit Insurance Corporation (FDIC) provides federal insurance for deposits made at banks.

Both of these organizations keep your money safe, and as long as you choose a bank or financial institution backed by the NCUA or the FDIC, your money will be protected up to a cap of $250,000 per depositor, per account.^{[1] [2]}

In this article, we’ll discuss the key differences between the NCUA and the FDIC, including the coverage they offer and the types of accounts they cover.

NCUA and FDIC: Key similarities and differences

The main difference between the NCUA and the FDIC is the types of financial institutions they offer coverage for. The table below details some of the main differences and similarities.

Sources ^{[1] [3] [4]}

What is the NCUA?

The National Credit Union Administration (NCUA) was created in 1970 by the U.S. Congress. It is an independent federal agency, and its role is to insure deposits at federally insured credit unions, regulate federal credit unions, and protect credit union members.^[5]

The NCUA Share Insurance Fund

The National Credit Union Share Insurance Fund was established to insure member share accounts at federally insured credit unions in the event of a credit union failure. This means that individual accounts are protected up to $250,000, and each member’s interest in any joint accounts combined is insured up to $250,000. The Share Insurance Fund also protects IRA and KEOGH retirement accounts up to $250,000

Credit union members receive share insurance coverage automatically when joining a federally insured credit union, meaning you don’t have to apply for this insurance when you set up an account with a credit union. As a result of the fund, no one has lost a penny of insured deposits at federally insured credit unions.^[1]

Types of accounts covered by the NCUA Share Insurance Fund

Many different types of credit union share deposits are covered by NCUA insurance, including deposits into draft accounts, savings accounts, and share certificates. Share insurance covers these deposits dollar-for-dollar through the date of the credit union’s closing, up to the insurance limit; this includes principal and any posted dividends. When the law permits, this insurance also covers nonmember deposits.

The types of credit union accounts covered by NCUA insurance are:

• Single Ownership Accounts: Accounts owned by one person with no beneficiaries: $250,000 per member-owner.
• Joint Ownership Accounts: Two or more persons with no beneficiaries: $250,000 per owner (with the primary owner a member of the credit union).
• IRAs and Other Certain Retirement Accounts: $250,000 per member-owner
• Revocable Trust Accounts: Each member-owner is covered up to $250,000 for every eligible beneficiary named or identified in the revocable trust. This is subject to certain limitations and requirements.
• Irrevocable Trust Accounts: Each owner is insured up to $250,000 for each beneficiary named or identified in the irrevocable trust, so long as all owners or all beneficiaries are members of the credit union. Coverdell Education Savings Accounts (formerly known as education IRAs) are insured as irrevocable trust accounts. This is subject to certain limitations and requirements.
  Source ^[1]

Types of accounts not covered by the Share Insurance Fund

While the NCUA insures many different types of credit union accounts, some are not covered under the Share Insurance Fund. This includes money invested in:

• Stocks
• Bonds
• Mutual funds
• Life insurance policies
• Annuities
• Municipal securities

These products are often provided to credit union members through third parties, and investment and insurance products are not insured by the Share Insurance Fund. If investment and insurance products are sold to credit union members, the credit union must disclose that the products are not insured by the NCUA, are not guaranteed by the credit union, and are subject to investment risks, including loss of the principal invested.^[1]

What is the FDIC?

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the United States government. It was established by Congress in 1933 following a rise in bank failures in the 1920s and 1930s, which led to many Americans losing their savings completely. Since the introduction of FDIC insurance, no depositor has lost a penny of insured funds as a result of a bank failure. ^[6]

The FDIC’s role is to protect bank depositors against the loss of their insured deposits if an FDIC-insured bank or savings association fails. This insurance is backed by the full faith and credit of the U.S. government.^[2]

How FDIC insurance works

In the event of a bank failure, providing the bank is FDIC-insured, the FDIC pays insurance to depositors up to the insurance limit (up to at least $250,000 per depositor, per bank, per ownership category). This insurance is calculated dollar-for-dollar, and includes the principal plus any interest accrued or due to the depositor through the date of the default.

The FDIC will either provide each depositor with an account at another insured bank with the amount equal to their insured balance at the failed bank or provide each depositor a check for the insured balance of their account at the bank that failed.

Depositors automatically receive FDIC coverage when opening a deposit account at an FDIC-insured bank, so there’s no need to apply for or purchase this insurance yourself.^[3]

Which accounts are covered by FDIC insurance?

The following deposit products are covered by FDIC insurance:

• Checking accounts
• Savings accounts
• Certificates of deposit (CD)
• Money market accounts
• Prepaid cards (as long as FDIC requirements are met)^[3]

Ownership categories covered by the FDIC

The amount of insurance coverage you can receive will depend on the ownership category of your account. The ownership category typically refers to the way you hold your money at the bank. Below are some examples of ownership categories and their coverage limits:

• Single accounts - Deposit accounts owned by one person without named beneficiaries: All single accounts owned by the same person at the same bank are combined and have a coverage limit of $250,000.
• Joint accounts - Deposit accounts owned by two or more people without named beneficiaries: Each co-owner’s shares of each joint account at the same insured bank are combined and insured up to $250,000. To qualify for this coverage, all account owners must be living people with equal rights to make withdrawals and have signed the deposit signature card (signature not required for CDs).
• Certain retirement accounts - Includes IRAs, self-directed defined contribution plans, self-directed Keogh plan accounts, and Section 457 deferred compensation plan accounts in which plan participants have the right to direct how the money is invested, including: All retirement accounts owned by the same person at the same bank are combined and insured up to $250,000.
• Trust accounts - Deposits held by one or more owners under revocable or irrevocable trusts: Coverage is calculated using the formula: Number of owners x number of beneficiaries x $250,000 = amount insured (cannot exceed $1,250,000 per owner for all trust accounts. For full details of coverage on trust accounts, visit the FDIC’s page.
• Employee benefit plan accounts - Deposits to pension plans, defined benefit plans, or other employee benefit plans that are not self-directed: An employee benefit plan account is an account representing funds of a plan where investment decisions are made by a plan administrator (not by the participants). The interests of each participant’s non-contingent interest under the plan are insured up to $250,000 per bank. For plans such as health and welfare plans with contingent interests, the coverage for the plan itself is $250,000.
• Corporation, partnership, or unincorporated association accounts - Deposits owned by corporations, partnerships, and unincorporated associations, including both for-profit and not-for-profit organizations: The corporation, partnership, or unincorporated association must be separately organized under state law and operate primarily for some purpose other than to increase deposit insurance coverage. All deposits owned by a corporation, partnership, or unincorporated association at the same bank are combined and insured up to $250,000, separate from any owners’ or members’ personal accounts.
• Government accounts - Deposit accounts owned by the United States (including federal agencies), any state, county, municipality, or other government possessions and territories, or Indian tribes: The Official Custodian of a public unit is insured up to at least $250,000 per bank. Visit the FDIC for the full details on government accounts that are insured.^[3]

The above is not an exhaustive list of FDIC insurance coverage limits; for more information on all coverage limits for each ownership category, visit the FDIC’s page.

Frequently asked questions about the NCUA and the FDIC

Is NCUA as good as FDIC?

The NCUA and the FDIC offer comparable protection in accordance with their respective federal mandates for deposits in different types of financial accounts. Both organizations are backed by the federal government, and both offer the same coverage of $250,000 for similar types of deposit accounts, including checking and savings accounts. The key difference is that the NCUA covers credit union deposits, and the FDIC covers bank deposits.^{[1] [3]}

How do I know if my accounts are insured by the NCUA or the FDIC?

Banks and credit unions are required to display their affiliations with the FDIC or the NCUA in places that make it easy for customers to see them. You should see logos on websites, bank or credit union windows, and inside branches. You can also use the FDIC’s BankFind tool to search for your bank, or use the NCUA’s Credit Union Locator to find information about the financial institution you’re looking for.^{[1] [7]}

What is the difference between FDIC and SIPC insurance?

The FIDC protects depositors at federally insured banks for losses up to $250,000 (per person, per ownership category) if a bank should fail.^[3]

The Securities Investor Protection Corporation (SIPC) is a non-profit membership organization that insures the clients of brokerage firms in the event that they file for bankruptcy. The SIPC protects each customer up to $500,000 for securities and cash (with a $250,000 limit for cash only).^[8]

Bottom line

While the NCUA and the FDIC offer insurance protections for deposits at different types of financial institutions, the coverage they offer is very similar, with a few slight differences.

If you’re deciding whether to use a bank or credit union for checking accounts, savings accounts, or other types of deposits, research the account types to decide which would be best suited to your situation. Consider comparing factors such as interest rates, fees, and any additional services when evaluating institutions.. As long as the financial institution is covered by the NCUA or the FDIC, your deposits are federally insured up to the applicable limits.

Sources

1. NCUA, “Share Insurance Coverage” https://ncua.gov/consumers/share-insurance-coverage
2. FDIC, “Deposit Insurance FAQs” https://www.fdic.gov/resources/deposit-insurance/faq
3. FDIC, “Are My Deposit Accounts Insured by the FDIC?” https://www.fdic.gov/resources/deposit-insurance/financial-products-insured
4. FDIC, “Financial Products That Are Not Insured by the FDIC” https://www.fdic.gov/resources/deposit-insurance/financial-products-not-insured
5. NCUA, “About NCUA” https://ncua.gov/about
6. FDIC, “About” https://www.fdic.gov/about
7. FDIC, “How Do I Find Out If a Bank Is FDIC Insured?” https://ask.fdic.gov/fdicinformationandsupportcenter/s/article/Q-How-do-I-find-out-if-a-bank-is-FDIC-insured?language=en_US
8. SIPC, “Mission” https://www.sipc.org/about-sipc/sipc-mission

About the author

Becca has over 10 years of experience as a content writer, working across various industries including finance, digital marketing, education, travel, and technology. Her work has been featured in publications including Forbes, Business Insider, AOL, Yahoo, GOBankingRates, and more.

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