Are Credit Unions as Safe as Banks?

Safety. It’s what every person wants especially when it comes to their money. Though curiously in recent years a study by American Express of over 1,800 participants showed that over 53% of consumers will keep their cash stashed at home rather than a savings institution. Yet “under the mattress” and walking around with loads of cash in your pocket are the last places you should consider.

Keeping your funds in a financial institution will protect your money from risk of loss or misplacement or theft, and to boot, your money will work for you earning interest while it sits. And while there may still be some confusion regarding credit unions (credit unions being similar to banks but technically not FDIC insured) your money is still equally safe with a credit union as it would be with a bank.

Credit Unions Are Federally Insured

Just as funds in a bank are federally insured through FDIC backing, credit unions are also federally insured though in a different manner. Funds deposited in credit unions are insured through the National Credit Union Insurance Fund (NCUSIF), which is backed by the U.S. Treasury. This coverage is administered through the National Credit Union Administration (NCUA), an agency of the U.S. government. When considering the benefits of partnering with a credit union, make sure that credit union is federally insured.

FDIC Insurance

Most people are familiar with the term FDIC insurance (Federal Deposit Insurance Corporation). It provides security to banking customers and protection from banking failure. FDIC insurance is backed by the U.S. Treasury.

NCUSIF Coverage

In the same manner banks are protected with FDIC insurance, credit unions are protected by the government guaranteed NCUSIF. According to NCUA, “the NCUSIF is a federal insurance fund backed by the full faith and credit of the United States government.” What this means is the U.S. government will be there for the protection of your funds in the event a federally insured credit union fails and the NCUSIF is drained of its monies; the U.S. government promises to provide all the funds required to replace what savings may have been lost. The NCUA is thankfully able to report that “Not one penny of insured savings has ever been lost by a member of a federally insured credit union.”

How Much Is Insured?

Just like FDIC, NCUSIF insurance provides coverage of up to $250,000 “per depositor per institution.” What this means is if you have less than $250,000 deposited at any banking institution, you’re 100% covered. And depending on how your accounts are classified, you might have coverage exceeding $250,000. As an example, if you have a checking account and an IRA at the same credit union, you might be protected with more than the $250,000 coverage limit. Use the NCUA’s Share Insurance Estimator to learn more about how your protection shakes down.

Credit Unions Are Safe!

The safety of your money is the number one priority! Federally insured credit unions are undoubtedly a safe bet when it comes to placing your money in protected hands.

Most credit unions are federally insured, but it’s always wisest to invest some time researching whatever banking institution you’re looking into as not all credit unions are created equal. Some credit unions are not federally insured, though they may have private insurance. They’re often quite safe, but they don’t have U.S. government backing. This ensures a great degree of safety, but not necessarily the highest degree of safety.

If the name of the credit union you’re considering includes the word “Federal,” they’re making the blatant statement that your funds are protected by NCUSIF.  Even still, if the credit union doesn’t include the word federal, they’re still likely to be insured by NCUSIF. One way to find out is to search for the specific credit union through the NCUA. You can easily find this information through their website at https://mapping.ncua.gov/ResearchCreditUnion.aspx. To be certain of the level of safety provided, ask questions and always do your research.

Rest assured, Missouri Central Credit Union is federally insured through the NCUA.

How to Join A Credit Union

By law, credit unions are required to define their field of membership. While not everyone can be a member of every credit union, these days there is a credit union available to nearly everyone. Membership fields can be limited by profession or a certain organization or be as broad a being a community-based credit union. The majority of consumers, especially in larger communities, have opportunities to join a credit union.

Joining a credit union is as simple as 1, 2, 3!

 

  • Step 1 – Meet the Eligibility Requirements
  • Step 2 – Deposit a Small Amount of Funds (AT MCCU, you’re only required just required a $25 deposit into a Primary Share Savings Account)
  • Step 3 – Begin Utilizing all the Great Financial Services Awaiting You!

To learn more about how to join Missouri Central Credit Union, click here! There is no fee to become a member/owner and you need only open a primary share savings account with at least $25. The path to safe funds and great services is as simple as that!