FDIC and NCUA—Is the Money in My Account Safe?

It’s important for you to understand how and where to safely keep your money. Thanks to the FDIC and NCUA, your financial institution is one of the safest places to store your hard-earned cash. The best part? All you have to do is open an account.

There are two organizations, both backed by the United States government, that insure your money at participating institutions. The FDIC is for banks and the NCUA (National Credit Union Administration) is for credit unions. These organizations both function as safety nets for your deposits.

While there are a few subtle differences between the two, they are extremely similar in the protection that they offer. Because of this protection, insured banks and credit unions and the covered accounts within them are one of the safest places that you can keep your money. In other words, it's completely safe to keep your money in a financial institution where it's insured and protected.

The FDIC was created in 1933 and insures up to $250,000 in cashier's checks, money orders, or prepaid cards from FDIC-backed banks, as well as checking and saving accounts, money market deposit accounts, and CD’s or certificates of deposits.

The NCUA was formed to protect each Credit Union member with at least $250,000 in total coverage. They do this by administering the National Credit Union Share Insurance Fund (NCUSIF) that was created in 1970 as a way to support Credit Union members’ checking & saving accounts, money market deposit accounts, share certificates & certificate of deposits, and IRAs or individual retirement accounts.

How much coverage you have depends on what category your account falls into. If you have a savings account and a checking account, those are both in the single owner account category, so they would be insured for a total of $250,000. But if you had accounts of different types—say a checking account and an IRA—each account would be insured for $250,000, meaning you would have a total of $500,000 of protection.

The vast majority of financial institutions and their account types are covered under these two organizations. But if you're worried at all about whether your institution or account is secure, check their website, talk with one of their representatives, or stop by a branch to confirm that your account is covered.

The rules change a little when it comes to joint accounts and trusts. Joint accounts are protected for $250,000 per owner. So if you have a joint account with your spouse, it would be insured for a total of $500,000. Trust accounts are generally insured for $250,000 per beneficiary. Meaning, if you have 3 beneficiaries listed in the trust, it would be protected for up to $750,000. In other words, only a trust’s beneficiaries are protected, not a trust’s owner.

If you have more than $250,000 that needs protecting, it’s going to require some strategizing. In order to get full protection for all of your funds, you’ll need to break them up into chunks that fit within the limits. That could mean spreading the money out between different account types or keeping some at one institution and some at another.

There are lots of specifics when it comes to FDIC and NCUA insurance. If you want to get more information about your situation and find out the best way to ensure that all of your money is protected, you can talk with your bank or credit union or check out the websites for the FDIC or NCUA.