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NCUA Insurance: Why You’re Safe with a Credit Union

March 27, 2023

With two major bank failures in the headlines, you’re likely wondering…is my money safe? If you’re a SECU member, the answer is yes. But why did Silicon Valley Bank and Signature Bank fail? Could what happened to these two banks happen to SECU? The short answer is no. At SECU, we prioritize safety and security for our members above anything else. 

In this blog, we break down what happened with these recent bank failures and highlight why being a SECU member is one of the best things you can do to protect your money. 

What happened to Silicon Valley Bank and Signature Bank?

Unless you work in the tech industry, you likely never heard of either of these banks before now. That’s because Silicon Valley Bank and Signature Bank primarily catered to tech companies, venture capitalists, and the like.

So why did these banks fail? Silicon Valley Bank placed major investments in bonds. Although bonds are often considered safe, rising interest rates from the Federal Reserve decreased their value. Word began to spread that rising rates would diminish the value of Silicon Valley Bank’s investments, effectively making the bank insolvent. Fearing the bank’s collapse, customers rushed to withdraw their money. The same scenario began to unfold at Signature Bank until regulators stepped in to take control.

Another factor contributing to these bank failures was their involvement in cryptocurrency. According to the U.S. Securities and Exchange Commission, nearly a quarter of all deposits at Signature Bank were cryptocurrency. Signature Bank was viewed as one of the most crypto-friendly banks, and investors were eyeing Silicon Valley Bank as an additional ally. The banks’ involvement in cryptocurrency further exacerbated fears they would become insolvent, driving their quick decline.

Although the banks folded, both were insured by the Federal Deposit Insurance Corporation (FDIC). The FDIC is a federal agency that regulates financial institutions and protects deposits at member banks. Typically the FDIC insures up to $250,000 in deposits, but they announced additional funds would be made available to refund members of Silicon Valley Bank and Signature Bank.

FDIC vs. NCUA: what’s the difference?

What is NCUA insurance?
The National Credit Union Administration (NCUA) essentially does the same thing for credit unions that the FDIC does for banks. Like the FDIC, the NCUA is an independent federal agency that insures deposits at credit unions like SECU.

How the NCUA works
As long as you do business with a credit union federally insured by the NCUA, your deposits will be protected up to $250,000. This protection applies to both personal and business accounts.

It’s important to note that NCUA insurance covers up to $250,000 per customer, per ownership category – not per account. In other words, you can maximize your coverage by maintaining accounts in different ownership categories. However, this rule applies solely to personal accounts. Meanwhile, coverage for business accounts and individual retirement accounts is exclusively limited at $250,000. Additionally, investments are not covered by NCUA insurance.

Insured by the NCUANot Insured by the NCUA
Checking accountsMutual funds
Savings accountsStocks
Money market accountsBonds
Certificates of depositLife insurance policies
Individual retirement accountsAnnuities

NCUA insurance limits: what isn’t covered?

Deposits are protected, but investments are not. Additionally, deposits exceeding $250,000 are not protected. However, customers may hold multiple accounts in different ownership categories. For example, you may have $250,000 in a personal savings account and another $250,000 in a joint account. Because these accounts have different ownership categories, both would be insured in full by the NCUA.

Although there are limitations to NCUA insurance, members may qualify for coverage over $250,000 depending upon the account type and owner. Ultimately, the NCUA offers reliable protection to SECU members.

“Not one penny of insured savings has ever been lost by a member of a federally insured credit union.” – NCUA

Not sure if your money is fully protected?
The NCUA’s Share Insurance Estimator lets you easily find out whether your money is protected. If your deposits exceed $250,000, you can see exactly how much is covered.

Members are safe with SECU

SECU members can rest assured that their deposits are protected. With over 70 years in the industry, we take pride in our role as Maryland’s largest credit union. We know that members like you depend on us to protect your finances, so we have strong guardrails in place to prioritize you. Plus, we operate differently than commercial banks. As a not-for-profit institution, we redistribute profits among our members in the form of lower fees and competitive interest rates. You can rest assured your money is safe with SECU.

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