NCUA vs. FDIC: What’s the Difference?

Both protect your deposits, but at different types of institutions

Fact checked by Brendan HarknessFact checked by Brendan Harkness

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

When you deposit cash, it’s important to know that your money is safe. As long as you choose a financial institution backed by the NCUA or the FDIC, you can rest assured that your money is protected up to $250,000.

Key Takeaways

• The NCUA provides federal insurance for deposits at credit unions, and the FDIC provides federal insurance at banks.
• Both the NCUA and FDIC offer up to $250,000 of deposit protection, per depositor, per account ownership category.
• In most cases, FDIC-insured banks and NCUA-insured credit unions are equally safe places to store your cash.

The NCUA and FDIC cover a variety of common account types at member institutions, including free checking accounts and high-yield savings accounts. 

NCUA vs. FDIC: An Overview

Congress created the NCUA and the FDIC to help provide stability and encourage public confidence in the nation’s banking system. These independent federal agencies provide government-backed deposit account insurance for consumers throughout the United States.

Important

Banks and credit unions can both be safe places to store your deposits, as long as you choose a financial institution that’s backed by either the FDIC or NCUA. 

The National Credit Union Administration

Congress established the National Credit Union Insurance Fund in 1970. The NCUA is an independent federal agency that oversees the deposit insurance coverage the U.S. government provides to members of federally insured credit unions.

Prior to 1970, credit unions did not offer their members federal deposit insurance. Since the introduction of the NCUA, no depositor has lost any of their insured deposits from a federally insured credit union. 

The NCUA provides an online tool you can use to see if any particular credit union is an NCUA-insured financial institution. The NCUA also requires all federally insured credit unions to disclose their membership at teller stations and on their websites. 

The Federal Deposit Insurance Corporation

Congress created the Federal Deposit Insurance Corporation in 1933. A series of bank failures in the late 1920s and early 1930s, during the Great Depression, led to a national financial crisis. Many Americans lost their life savings as a result. 

In 1934, FDIC insurance was introduced. Since that time, there have been additional bank failures, yet no depositor has lost even one penny of insured deposits thanks to the guarantee that FDIC insurance provides. 

You can use the FDIC’s BankFind Suite tool to see if a bank you’re considering is FDIC-insured. Financial institutions should also disclose if they’re a member of the FDIC on their websites and on signs at physical branches.

Other Differences Between the NCUA and FDIC

In most ways, the coverage offered by the NCUA and the FDIC is quite similar. Both NCUA insurance and FDIC insurance protect the cash you keep in eligible deposit accounts up to $250,000. Neither the NCUA nor the FDIC covers stocks, bonds, mutual funds, or cryptocurrency investments. Both NCUA and FDIC insurance coverage is also automatic. You don’t need to opt in to receive coverage—your funds are covered as soon as they’re deposited.  

There are a couple of other small differences between these government institutions, although they don’t affect the average depositor much.

• The NCUA is also responsible for regulating federal credit unions. 
• Although the Federal Reserve is the primary regulating body for federal banks, the FDIC also helps to supervise insured banks. The FDIC is also the primary regulator for state-chartered banks that opt out of joining the Federal Reserve System. 

If you’re trying to choose between a credit union and a bank, first make sure any options on your list are members of one of the two organizations. Then take the time to review the offered accounts, rates, fees, and features. Once you complete this step, you should have an easier time selecting the right fit for your financial needs. 

“There is a sense of ease and convenience associated with traditional banks with user-friendly apps to track your finances, but it’s also important to note that oftentimes, banks charge higher fees and pay you lower interest on your accounts,” said Lea Ann Knight, CFP and managing partner at Better Money Decisions. 

“While credit unions are typically regional organizations with fewer digital features,” said Knight, “many people tend to like them for the personalized experience, minimal fees, and lower interest rates on loans.”

Frequently Asked Questions (FAQs)

What’s the Difference Between NCUA and FDIC Insurance?

The difference is that NCUA insurance applies to deposit accounts at federally insured credit unions, and FDIC insurance applies to deposit accounts of federally insured banks. Both types of government-backed insurance provide up to $250,000 in coverage, per account owner, per ownership category in the event of a credit union or bank failure. 

What Is the Difference Between SIPC and FDIC Insurance?

FDIC insurance protects federally insured bank customers against losses (up to $250,000 per account owner, per ownership category) in the event of a bank failure. 

The Securities Investor Protection Corporation (SIPC) provides insurance that protects the clients of brokerage firms that are forced into bankruptcy. This SIPC insurance provides up to $500,000 in coverage, including up to $250,000 for cash. However, SIPC insurance doesn’t provide coverage for market-related losses. 

How Can I Know if My Institution Is Insured by the FDIC or NCUA?

Both the FDIC and NCUA require member banks and credit unions to display their affiliation in locations where it’s easy for customers to see them. Logos should be visible in a financial institution’s windows, at teller stations, and online. You can also use lookup tools on both the FDIC and NCUA websites to see if a financial institution is a member of either federal agency. 

Are Any Banks Not FDIC-Insured?

While it’s rare, it is possible for a bank to not be a member of the FDIC. Therefore, it’s important to verify that any bank you’re considering is a member before you open an account to ensure your deposits are protected by federal deposit insurance. 

Is NCUA Safer Than FDIC?

Neither one is safer than the other. Both the NCUA and FDIC are backed by the federal government. Each agency offers the same amount of coverage ($250,000) for roughly the same types of deposit accounts, including checking and savings accounts. But they protect deposits at different types of institutions: NCUA protects deposits at credit unions, and FDIC protects deposits at banks.

The Bottom Line

Federally insured credit unions and banks have nearly equal protections when it comes to your deposits. The differences between FDIC and NCUA insurance are minimal, except for the types of institutions they regulate. Therefore, if you’re trying to choose between a bank and a credit union, your best bet is to figure out which option is the best fit for your financial needs based on the account types, rates, fees, and features they offer—and then make sure it’s a member of the relevant agency. 

Read the original article on Investopedia.