We mentioned earlier that credit unions have been insured by the federal government since 1970. While this is true, not all credit unions, or banks for that matter, are insured. Before joining any financial institution, it would be beneficial to research the types of insurance the financial institution has and the limits on coverage that may be in place.
Are Credit Unions Safer Than Banks?
Carefully regulated, credit unions typically have the same protections as banks, with a few differences. While banks are insured by the Federal Deposit Insurance Corporation (FDIC), credit unions carry their insurance through the National Credit Union Administration’s (NCUA) National Credit Union Share Insurance Fund (NCUSIF).
Are Credit Unions FDIC Insured?
Credit unions are insured through the NCUA rather than the FDIC. The two organizations have similar roles and regulations, their main difference is the institutions they oversee. The standard share insurance covered by the NCUA is $250,000 through the National Credit Union Share Insurance Fund, which is similar coverage to what banks receive with the FDIC. Under the NCUA, each credit union member has at least $250,000 in coverage in individual accounts. Members’ interest in all joint accounts combined is also insured up to $250,000. The Share Insurance Fund also separately protects members’ IRA and KEOGH retirement accounts up to $250,000 and provides additional coverage for members’ trust accounts. In the past, insured funds have been returned to the members within days after credit unions close. Learn more about how your accounts are insured.
In short, the answer to the question, “Are credit unions safe from collapse?” is two-fold. The first part is a no. There are no financial institutions that are truly safe from collapse. The second part is more positive. Typically, money in savings accounts is insured up to $250,000. However, in DCU’s Smart Savings account the money you deposit will be federally insured up to 3 million dollars*.
If you have more money than is federally insured when a credit union goes under, you will not necessarily lose the money that’s not covered by federal insurance. Often, a credit union will be taken over by a another credit union. In that case, funds would be transferred to the surviving credit union. If that isn’t the case, the federal government may decide to refund your money in part or in full.
Credit Union Security Measures
We all know that the financial sector can be vulnerable to cyber-attacks. Because of this, the NCUA has made cybersecurity one of its top priorities. Providing credit unions with guidance, education, and resources, the NCUA is continually improving credit union resilience.
As a credit union focused on protecting its members, DCU takes many measures to improve security both online and offline while still making everyday banking accessible. Here are some examples:
- When it comes in the mail, your credit card cannot be used until you call the number on a sticker on the front and confirm your identity.
- DCU utilizes Visa Secure, an ecommerce service for online purchases that help prevent fraudulent activity by requiring electronic confirmation, such as the card expiration date to match what is on file.
- Through Digital Banking, DCU’s mobile and desktop platform, you can easily freeze or unfreeze credit cards and set up travel notifications. You can also feel safe using your personal information for online purchases with identity theft protection from Norton LifeLock, offered through Visa. Their ID Navigator helps you stay informed against identity theft. Plus, you can get dark web monitoring, stolen wallet assist, and data breach notifications.
- EMV chips embedded in your physical credit card are also an added layer of protection. This chip securely stores data which has previously been stored in the card’s magnetic strip. Because EMV chip cards use cryptograms that are unique to each transaction, stolen chip card data cannot be used to create counterfeit cards.
Interested in getting a credit card from DCU? Check out our options, all with different features and benefits!
Credit Union Safety FAQs
- Are my deposits in a credit union insured?
Yes! Most credit unions are insured like banks but by the NCUA. All federally insured credit unions will have the NCUA logo displayed on their website as well as where deposits are received.
- Can credit unions offer competitive interest rates?
Credit unions can offer competitive interest rates for loans and savings accounts. Their flexibility lies in their non-profit statuses and the fact that they’re owned by their members rather than investors.
- Can I access my funds easily in a credit union?
DCU offers a variety of services to make it simple for its members to access their funds. From assistive technology to the services offered through digital banking such as text alerts and eStatements, DCU is all about making banking accessible, secure and simple.
- How can I check the financial health of a credit union?
You can check on the health of a credit union at any time. Make sure it’s federally insured and check up on its financial welfare by going to NCUA’s website. Clicking on “Credit Union Data” will give you an insight into the numbers standing behind the credit union you’re researching.
DCU: A safe choice. A smart choice.
If you’ve read this far about credit union safety, you’re on the right track. It’s important to make sure your funds are in good hands. Are you interested in finding the best place for your savings? Our Smart Savings product is a great way to keep your money safe while federally insuring your funds up to $3 million, giving it room to grow.
Credit unions care about their members before anything else. They’re not held back by investors or profit. They exist to serve their community. With typically offering better rates of return than big banks, now is the time to start saving with a credit union.
