Can you lose money in a credit union?
Most Deposits Are Insured Through the NCUA
Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC). Instead, the National Credit Union Administration (NCUA) is the federal insurer of credit unions, making them just as safe as traditional banks.
“That's the main difference between (banks and credit unions),” says Rutger van Faassen, head of marketing strategy at analytics provider Curinos. Credit unions typically provide better savings and lending rates, van Faassen says. NCUA insurance: Federally insured credit unions are backed by the U.S. government.
Limited accessibility. Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.
DEPOSITS AT CREDIT UNIONS ARE OFTEN INSURED
The failures we have seen in recent months are highly unlikely at a credit union. Credit unions are similarly insured up to $250,000 by either the National Credit Union Administration or private organizations like American Share Insurance (ASI), rather than the FDIC.
Yes. Generally speaking, credit unions are safer than banks in a collapse. This is because credit unions use fewer risks, serving individuals and small businesses rather than large investors, like a bank.
Experts told us that credit unions do fail, like banks (which are also generally safe), but rarely. And deposits up to $250,000 at federally insured credit unions are guaranteed, just as they are at banks.
Credit unions are federally insured by the National Credit Union Share Insurance Fund (NCUSIF), which is backed by the full faith and credit of the U.S. government. The bank equivalent is the (more widely known) Federal Deposit Insurance Corporation (FDIC).
However, because credit unions serve mostly individuals and small businesses (rather than large investors) and are known to take fewer risks, credit unions are generally viewed as safer than banks in the event of a collapse.
Federally insured credit unions and banks are both safe places to keep your money. The National Credit Union Administration protects deposits (within certain limits) at insured credit unions and the Federal Deposit Insurance Corp. protects deposits (within certain limits) at insured banks.
Why do people not like credit unions?
Cons of credit unions
Limited access: Credit unions usually serve a specific community or region, resulting in fewer branches and ATM access. Fewer product options: While credit unions offer many of the same products as banks, you may not have as many options for each as you would with a bank.
While joining a credit union likely won't affect your credit score in and of itself, some of the financial products offered by credit unions can have an impact on your score.
Credit unions do fail from time to time, too, and have seen a few more failures in recent years than banks.
The short answer is no. Banks cannot take your money without your permission, at least not legally. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per account holder, per bank. If the bank fails, you will return your money to the insured limit.
Most banks & credit unions are required to pay for insurance to protect the money you hold in their accounts. FDIC & NCUA insurance covers a maximum of $250,000 of your money per customer per ownership category.
| Bank NameBank | CityCity | Closing DateClosing |
|---|---|---|
| Heartland Tri-State Bank | Elkhart | July 28, 2023 |
| First Republic Bank | San Francisco | May 1, 2023 |
| Signature Bank | New York | March 12, 2023 |
| Silicon Valley Bank | Santa Clara | March 10, 2023 |
If a credit union is placed into liquidation, the NCUA's Asset Management and Assistance Center (AMAC) will oversee the liquidation and set up an asset management estate (AME) to manage assets, settle members' insurance claims, and attempt to recover value from the closed credit union's assets.
Putting money in savings accounts, money market accounts, and CDs keeps your money safe in an FDIC-insured bank account (or NCUA-insured credit union account). Alternatively, invest in the stock market with a broker.
Angela Vossmeyer, associate professor of economics at Claremont McKenna College and faculty research fellow at the National Bureau of Economic Research, agrees that on the liability side, credit unions are in a much better place than banks because a greater percentage of their deposits are insured.
(FDIC) bank failures from 2021 up until the March 10 closure of Silicon Valley Bank. Notably, there were no credit union failures directly following the collapse of Silicon Valley Bank. “The credit union system remains well-capitalized and on a solid footing,” said NCUA Chairman Todd Harper in a statement on March 13.
Are credit unions more risky?
Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.
Although there is a prevailing assumption that small credit unions are barely surviving, that assumption has been debunked by the Filene report, “The Puzzle-Solving Approach That Enables Small Credit Unions to Thrive.”
| Bank | Forbes Advisor Rating | Products |
|---|---|---|
| Chase Bank | 5.0 | Checking, Savings, CDs |
| Bank of America | 4.2 | Checking, Savings, CDs |
| Wells Fargo Bank | 4.0 | Savings, checking, money market accounts, CDs |
| Citi® | 4.0 | Checking, savings, CDs |
These days, credit unions are safe and secure, having been insured by the government for over 50 years. Credit unions are a popular place for savings accounts because they often offer more favorable interest rates on both loans and savings accounts.
- Alliant Credit Union.
- America First Credit Union.
- American Airlines Federal Credit Union.
- Bethpage Federal Credit Union.
- Boeing Employees' Credit Union.
- Connexus Credit Union.
- Patelco Credit Union.
- Quorum Federal Credit Union.
