National Credit Union Administration (NCUA)

Written By
Paul Tracy
Updated November 4, 2020

What is the National Credit Union Administration (NCUA)?

The National Credit Union Administration (NCUA) is an agency of the United States government that charters and oversees federal credit unions. It was created by Congress in 1970.

How Does the National Credit Union Administration (NCUA) Work?

A credit union is a bank-like financial institution that is owned by its depositors. Many corporations and organizations form credit unions for use by their employees. The core functions of the NCUA are to charter these institutions and then oversee them to make sure they are solvent and operated in the best interests of their owners.

Like the Federal Depository Insurance Corporation (FDIC), the NCUA helps maintain the stability of the banking system by insuring deposits. However, the NCUA insures deposits at credit unions, while the FDIC insures deposits at banks. Like the FDIC, the NCUA insures deposits for up to $250,000, but it is important to remember that this coverage is generally for the total of an investor’s deposits at any one institution. Thus the investor is not fully insured if he or she has $150,000 in a checking account and then purchases a $75,000 CD from the same institution, for example. The NCUA insures individual retirement accounts and Keoghs at credit unions for up to $250,000

Why Does the National Credit Union Administration (NCUA) Matter?

The NCUA insures deposits in federal and most state-chartered credit unions via the National Credit Union Share Insurance Fund (NCUSIF). Credit unions that want this insurance must keep 1 percent of their deposits in the NCUSIF. These premiums pay for the operation of the NCUA and are of course kept in reserve in case any claims are made. The NCUSIF is backed by the full faith and credit of the U.S. government, and credit unions that carry this insurance must prominently display the official NCUA insurance sign.

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