FDIC and NCUA
There are two organizations, both backed by the United States government, that insure your money at participating institutions. The FDIC (Federal Deposit Insurance Corp) is for banks and the NCUA (National Credit Union Administration) is for credit unions. These organizations both function as safety nets for your deposits.
While there are a few subtle differences between the two, they are extremely similar in the protection that they offer. Because of this protection, insured banks and credit unions and the covered accounts within them are one of the safest places that you can keep your money. In other words, it's completely safe to keep your money in a financial institution where it's insured and protected.
Is My Money Protected?
How do you know if your institution is insured? The vast majority of banks and credit unions in the US are. To confirm that your institution is covered, you can check their website or talk with a representative by giving them a call or stopping by a branch.
How Much of My Money is Protected?
Both the NCUA and FDIC insure up to $250,000 per account ownership type/account type and institution. What does that mean? It gets a little complicated depending on the account types but, essentially, it means that you have at least $250,000 of protection on your deposits should the worst happen and your bank or credit union is forced to close.
How much coverage you have depends on what category your account falls into. If you have a savings account and a checking account, those are both in the single owner account category, so they would be insured for a total of $250,000. But if you had accounts of different types—say a checking account and an IRA—each account would be insured for $250,000, meaning you would have a total of $500,000 of protection.
Joint Accounts and Trusts
The rules change a little when it comes to joint accounts and trusts. Joint accounts are protected for $250,000 per owner. So if you have a joint account with your spouse, it would be insured for a total of $500,000. Trusts are generally insured for $250,000 per beneficiary. Meaning if you have 3 beneficiaries listed in the trust, it would be protected for up to $750,000.
When it comes to what kinds of accounts are insured, almost everything that isn’t an investment would be protected. That includes checking, savings, trusts, CDs, and Money Market Accounts. Accounts that generally aren’t protected would be things like stocks, bonds, or money market funds.
Protecting it all
If you have more than $250,000 that needs protecting, it’s going to require some strategizing. In order to get full protection for all of your funds, you’ll need to break them up into chunks that fit within the limits. That could mean spreading the money out between different account types or keeping some at one institution and some at another.
There are lots of specifics when it comes to FDIC and NCUA insurance. If you want to get more information about your situation and find out the best way to ensure that all of your money is protected, you can talk with your bank or credit union or check out the websites for the FDIC or NCUA.