How Are Credit Unions Insured?
Credit unions differ from other financial institutions in that they are owned by members and are not-for-profit cooperatives. The board is often operated by volunteers. Credit unions, like banks, are insured by a federal agency.
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The Basics
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Credit unions are monitored by the National Credit Union Administration (NCUA), an independent federal agency. The NCUA administers the National Credit Union Share Insurance Fund (NCUSIF).
Function
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The National Credit Union Share Insurance Fund (NCUSIF) is backed by the full faith and credit of the U.S. government. All member accounts are covered by this federal insurance agency.
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Features
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Federal credit union insurance has been increased from $100,000 to $250,000. This increase will remain in effect until December 31, 2013, unless extended by federal authorities.
Signifcance
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The NCUSIF was created by Congress in 1970. This insurance offers the same protection as the Federal Deposit Insurance Corporation (FDIC), which covers banks.
Considerations
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Federal credit unions are often created to serve a large number of employee groups such as city, state or federal employees, or other organized groups of people with a common bond.
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