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Columns: Dr. Don
Don Taylor, Ph.D., CFA, CFP   Expert: Don Taylor, Ph.D., CFA, CFP
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U.S. government backs member shares
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Insured credit union accounts are safe
 Editor's Note: On Oct. 3, 2008, Congress raised the FDIC insurance amount to $250,000. This change will be in effect until Dec. 31, 2009, unless it is renewed.

Dear Dr. Don,
Is an account at a federally insured credit union just as safe and secure as an account at an insured bank?
-- Michael Money

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Dear Michael,
The National Credit Union Share Insurance Fund, or NCUSIF, insures shares at credit unions at a limit of $100,000 for the standard maximum share insurance amount.

"Shares" at a credit union are the same thing as "deposits" at a bank. This is because at a credit union, the account holder is a part owner -- or shareholder -- of the financial institution.

NCUSIF-insured funds get the same protection as bank deposits insured by the Federal Deposit Insurance Corp. Like FDIC-insured deposits, NCUSIF-insured shares are backed by the full faith and credit of the U.S. government.

There hasn't been as much discussion concerning what this backing actually means for credit unions as there has been in the banking industry, but I address this in an earlier column, "U.S. government stands behind deposits."

How do you know if your credit union provides NCUSIF insurance? The National Credit Union Administration publication "Share Insurance" states the following:

Credit unions that are insured by the NCUSIF must display in their offices the official NCUA insurance sign which appears on the cover of this brochure. All federal credit unions must be insured by NCUA, and no credit union may terminate its federal insurance without first notifying its members.

Like FDIC insurance, NCUSIF insurance considers joint accounts separately from individually held accounts. Trust accounts are treated as separate accounts as well. Certain retirement accounts qualify for $250,000 in NCUSIF coverage over and above the standard maximum share insurance amount coverage on individual accounts.

The National Credit Union Administration has a "NCUA Share Insurance Estimator" on its Web site that will help you determine if your shares are fully insured.

Bankrate.com's corrections policy -- Posted: June 18, 2008
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