Safety of Credit Unions Vs. Banks

The credit union is a type of non-profit financial institution that gives consumers an alternative to banks. One of the issues that many people wonder about when considering a credit union is whether or not their money is really safe. Credit unions compare very favorably to banks when looking at the level of safety that they represent.

  1. Insured Accounts

    • When you put your money in a bank account, it is insured by the Federal Deposit Insurance Corp., or FDIC. The amount that you have deposited is insured up to a maximum of $250,000 per account. When you deposit money with a credit union, you can also have your money insured up to $250,000. The key difference is that it is insured by a different organization. The National Credit Union Association is the entity that provides protection for depositors of credit unions.

    Checking Out the Credit Union

    • When you are thinking about depositing with a credit union, you have the ability to check out its financial situation. You can get on the National Credit Union Association's website and look up specific information about the credit union. You can type in the name of the credit union and look at financial records. You can see how much it has in assets and whether or not the loans it has are performing as they should. This will give you an indication of the financial strength of the individual credit union.

    Insuring Large Amounts

    • With both banks and credit unions, the maximum amount of money that you can have insured with a single bank and account is $250,000. If you have more than that to put in an account, you may be worried about the possibility of losing that money is the bank goes under. If you deposit all the money into a single account, this could happen. If you spread your money over several different banks or credit unions, you can be insured for multiple accounts. (See References 2)

    How the Protection Works

    • When you deposit money into a credit union, they pay a small percentage of your deposit to the National Credit Union Association. The NCUA then keeps the money in a fund that was created by the United States government. This fund is backed up by the federal government. This means that if the fund does not have enough money in it, the government would step in and reimburse any account holders that lost their money. (See References 4)

Related Searches


You May Also Like

Related Ads

Related Searches
Basic but Sometimes Overlooked Tips Can Save You Time and Money Read Article

Basic but Sometimes Overlooked Tips Can Save You Time and Money