Understanding FDIC and NCUA Insurance

Introduction

Millions of Americans trust financial institutions with their money, but what happens if the institution fails? This is where the Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Administration (NCUA) come in. This lesson will help you understand what FDIC and NCUA insurance are and what types of accounts are covered.

What is FDIC Insurance?

The Federal Deposit Insurance Corporation (FDIC) insures deposits in most financial institutions in the United States. FDIC insurance is backed by the full faith and credit of the United States government. The FDIC protects depositors against the loss of their deposits if a FDIC-insured financial institution fails. Basic FDIC insurance is $250,000 per depositor per insured financial institution.

What is NCUA Insurance?

The National Credit Union Administration (NCUA) is an independent federal agency that insures deposits at federally insured credit unions. The NCUA is the independent agency that administers the National Credit Union Share Insurance Fund (NCUSIF). Like the FDIC’s Deposit Insurance Fund, the NCUSIF is a federal insurance fund backed by the full faith and credit of the United States government and covers up to $250,000 per account holder per institution.

What Accounts are Insured?

Checking accounts, savings accounts, Negotiable Order of Withdrawal, or NOW, accounts, and time deposit accounts such as certificates of deposit (CDs) are typically insured. Certain retirement accounts such as Individual Retirement Accounts (IRAs) may also be insured.

What Accounts are NOT Insured?

Investments in mutual funds, annuities, stocks, bonds, Treasury securities, or other investment products, whether purchased through a bank or a broker/dealer are not insured. Safe deposit boxes and losses from robberies and other thefts are also not insured.

Conclusion

Knowing what types of accounts are FDIC and NCUA-insured can help you make informed decisions about where to deposit your money. Remember that FDIC and NCUA insurance only protects deposits, not investments.

Further Reading