When a bank fails, customers (also called depositors) at other banks or credit unions often worry about their money. However, bank failures have been very uncommon over time. In fact, in the last ten years, far less than 1% of banks have failed (USA Today). Additionally, the money held in most accounts at a failed bank is insured through the Federal Deposit Insurance Corporation (FDIC). Money held in credit union accounts is insured through the National Credit Union Administration (NCUA). Many types of accounts are covered by insurance such as checking, savings, certificates of deposit, money market accounts, and others. Note that investments such as stocks, bonds, mutual funds, annuities, life insurance, crypto assets, and other investments are not insured by the FDIC or NCUA.
Most banks & credit unions are required to pay for insurance to protect the money you hold in their accounts. FDIC & NCUA insurance covers a maximum of $250,000 of your money per customer per ownership category. Because of how FDIC and NCUA insurance is structured, customers may be able to insure a larger amount than $250,000. To learn if your bank or credit union offers FDIC or NCUA insurance, look for these signs at your local branch:
Also, there are other ways to learn if insurance coverage is offered through your bank or credit union. You can:
Call your bank or the FDIC at 1-877-ASK-FDIC (275-3342)
Call your credit union or the NCUA at 1-800-755-1030
You can also use online tools to explore your insurance coverage at your bank or credit union.
The FDIC offers the Electronic Deposit Insurance Estimator (EDIE). EDIE allows you to input dollar amounts you have on deposit in an insured bank or use a hypothetical scenario to determine your coverage. EDIE can be found at https://edie.fdic.gov/calculator.html
The NCUA offers the Share Insurance Estimator, which lets consumers, credit unions, and their members know how its share insurance rules apply to member share accounts—what’s insured and what portion (if any) exceeds coverage limits. This tool can be found at https://mycreditunion.gov/insurance-estimator
Talk about the safety of money you hold at banks or credit unions–and other financial topics–with your county’s financial educator. Visit https://counties.extension.wisc.edu/ for more information.
Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.
All deposits at federally insured credit unions are protected by the National Credit Union Share Insurance Fund, with deposits insured up to at least $250,000 per individual depositor. Credit union members have never lost a penny of insured savings at a federally insured credit union.
The NCUA insures credit union accounts, while the FDIC provides insurance for bank accounts. They both come with the same limits on insurance coverage. A decision about whether to store money in a credit union or bank shouldn't be affected by which federal agency insures the institution.
If the financial institution is a member of the FDIC or NCUA, your account will be insured for up to $250,000 if the financial institution has difficulties. Both federal and state charted financial institutions can be members of the FDIC and the NCUA.
However, because credit unions serve mostly individuals and small businesses (rather than large investors) and are known to take fewer risks, credit unions are generally viewed as safer than banks in the event of a collapse. Regardless, both types of financial institutions are equally protected.
Additionally, the money held in most accounts at a failed bank is insured through the Federal Deposit Insurance Corporation (FDIC). Money held in credit union accounts is insured through the National Credit Union Administration (NCUA).
It's rare for a bank not to have FDIC insurance, but there are exceptions. Bank of North Dakota, for example, is not FDIC-insured. Instead, it is backed by the full faith and credit of the State of North Dakota.
FDIC rules restrict the ability of banks to take brokered deposits and the interest they can pay. Despite these restrictions, there has been a pattern of greater reliance on brokered deposits before a bank fails and greater losses to the FDIC from failed banks that are heavily reliant on brokered deposits.
Through right of offset, the government allows banks and credit unions to access the savings of their account holders under certain circ*mstances. This is allowed when the consumer misses a debt payment owed to that same financial institution.
The standard deposit insurance coverage limit is $250,000 per depositor, per FDIC-insured bank, per ownership category. Deposits held in different ownership categories are separately insured, up to at least $250,000, even if held at the same bank.
People choose banks primarily because of the convenience of multiple branches across the country, along with better technology. On the flip side, people choose credit unions primarily because of discounted loan rates, higher interest rates and better customer service.
As long as your deposit accounts are at banks or credit unions that are federally insured and your balances are within the insurance limits, your money is safe. Banks are a reliable place to keep your money protected from theft, loss and natural disasters. Cash is usually safer in a bank than it is outside of a bank.
People choose banks primarily because of the convenience of multiple branches across the country, along with better technology. On the flip side, people choose credit unions primarily because of discounted loan rates, higher interest rates and better customer service.
WHAT IS A CREDIT UNION. A credit union is a customer/member owned financial cooperative, democratically controlled by its members, and operated for the purpose of maximizing the economic benefit of its members by providing financial services at competitive and fair rates.
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