Protecting what you own against the risk of loss is the fundamental concept behind getting insurance. If you own a car or a home, then you probably pay a monthly or yearly amount to an insurance company in exchange for a promise that if it gets damaged or destroyed, you'll receive a certain amount of money so you can repair or replace it. You sleep at night knowing that your financial life won't be completely turned upside down in the event that a loss or tragic event occurs.
Keeping your money in a federally insured credit union gives you that same peace of mind. Thanks to the National Credit Union Administration (NCUA), your deposits will be protected in the unlikely event that your credit union fails.
What is the NCUA?
The NCUA is an independent U.S. agency that regulates and supervises federal credit unions, and it handles the National Credit Union Share Insurance Fund (NCUSIF). It is very similar to the Federal Deposit Insurance Fund (FDIC) for banks. Like the FDIC, the NCUA is backed by the full faith and credit of the United States government, so you're guaranteed to get up to $250,000 of your deposit money back.
Ninety-eight percent of all credit unions in the U.S. are covered under the NCUA, and you can easily find out if your credit union offers it by looking for the trademark NCUA label in white letters against a blue background found at every teller station and on credit unions' webpages. An NCUA credit union also may not end its association with the agency without first notifying all account holders of its intention to do so first.
Keeping an account at a credit union that is a member of the NCUA means that not only is your money federally insured at no direct cost to you, but the credit union is also subject to stricter regulations. In other words, these regulations can help credit unions avoid financial problems so that you don't have to worry too much about possible failures or liquidations.
Accounts NCUA insurance covers -- and doesn't cover
In general, your individual accounts -- savings accounts (regular shares), checking accounts (share draft accounts) and share certificates -- are insured. It's important to note that investment accounts, such as mutual funds and stocks, are not covered under NCUA. But traditional IRAs, Roth IRAs, and KEOGH (defined-contribution and defined-benefit plans) retirement accounts do fall under NCUA protection at federally insured credit unions.
While account holders are always insured up to $250,000, additional coverage is available in certain circumstances. Keep in mind that the $250,000 limit applies to each individual credit union. That means if you hold two accounts at two different credit unions, your total insurance protection is $500,000. And if a married couple has a joint account, then the total coverage of the account is $500,000 -- $250,000 for each individual depositor.
You can find out exactly what's insured and if any portion exceeds the coverage limits by going to the interactive website at MyCreditUnion.gov.
Process of getting your NCUA-insured funds back
Although your money is protected up to $250,000, it does take a little bit of time to receive those funds if the credit union fails. According to the NCUA "Your Insured Funds" brochure, "checks are usually mailed within three days after the credit union is placed into liquidation." Unless you can function normally for a few days without a checking or savings account, that delay could be costly. But if an on-site payment is more convenient for you, the liquidation team will give you the check directly.
How to find a NCUA credit union
You can get more information about the NCUA, its credit unions and your insured funds by going to NCUA.gov. If you're interested in joining a credit union that is NCUA-insured, you can use the site as a search tool to find credit unions near you. Get up-to-date information about the latest regulations, laws or research-proposed changes to the industry that could potentially impact you and your finances.
Being a member of a credit union that's part of the NCUA takes away the stress and worry you might have regarding your money's safety. While others might panic if their credit union fails, you'll know that your money is safe and secure from loss.
This article originally appeared on GoBankingRates.
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