Dear 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
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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