cds

Credit union CDs are not risky

Don Taylorq_v2.gifDear Dr. Don,
I'm thinking about opening a CD account at a local credit union. The CD is insured by the National Credit Union Administration, or NCUA. While I know a lot about bank-insured FDIC accounts, I do not know much or hear much about the NCUA. Will my deposit at this credit union be as safe as the one at a bank?
-- Michael Misgivings

a_v2.gifDear Michael,
Great question. Everyone knows about bank insurance through the Federal Deposit Insurance Corp. However, the NCUA's National Credit Union Share Insurance Fund, or NCUSIF, is less well-known. Because credit unions are owned by their depositors, the deposits are called shares, and deposit insurance is called share insurance.

NCUSIF-insured products are backed by the full faith and credit of the U.S. government, just like FDIC-insured products. The limits on the share insurance are the same as the limits on FDIC insurance, currently $250,000 per individual account holder.

I wouldn't have any second thoughts about choosing NCUSIF-insured shares. You shouldn't either. Besides, credit unions often offer higher interest rates than banks.

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Read more Dr. Don columns for additional personal finance advice. To ask a question of Dr. Don, go to the "Ask the Experts" page and select one of these topics: "Financing a home," "Saving & Investing" or "Money."

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