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Are Credit Unions FDIC Insured?

NEW YORK ( TheStreet) -- Are credit union deposits FDIC-insured?

No, but it doesn't matter.

For starters, the Federal Deposit Insurance Corp. only insures deposits in banks and savings and loan associations. Federal credit unions have their own insurance fund, which is run by the National Credit Union Administration, of NCUA.

When you join a credit union, you don't really make a "deposit." Instead, you become a "member" of the credit union and the dollars you put in are called "shares." If your credit union is insured by the National Credit Union Insurance Fund, or NCUSIF, your shares are insured in a similar way to the way bank deposits are insured by the FDIC.

All federal credit unions are insured by the NCUSIF. State-chartered credit unions may be insured by the NCUSIF, or might have their own state insurance or private insurance.

All credit unions insured by the NCUSIF are required to display the official NCUA insurance sign.

The summary below covers some basic NCUA insurance scenarios, but you should double-check with your credit union if you have multiple accounts in various names, to make sure you understand how much of your shares are insured.

Basic Insurance Limits

Individual accounts: For starters, share-insurance limits are per credit union and not per branch. If your shares in one or more account in one credit union total less than $250,000, they are all insured. Insurance limits increase and get more complicated when you consider joint accounts, retirement accounts and trusts.

Joint accounts: The basic $250,000 limit applies also to separate ownership interests in joint accounts. So if you have a joint account with a balance of $500,000, each account holder's ownership interest is insured up to $250,000, so the entire joint account is insured. This is separate from any individual accounts you and the other person may have. This means that if you each have individual accounts with balances of $250,000, together with the joint account with $500,000, you and the other person have total insured shares of $1,000,000. As they are for individual accounts, identically-registered accounts have their share balances added together to determine the maximum insured amounts.

Trust accounts: The NCUA says that "The trust interest of a beneficiary in a valid irrevocable trust, including Coverdell Education Savings Accounts, formerly Education IRAs, if capable of evaluation in accordance with published rules, is insured" up to the $250,000, separately from the individual accounts of the grantor, the trustee or the beneficiary. This coverage is separate from and in addition to the coverage available for other accounts such as individual accounts and retirement accounts. Of course, if you are opening trust accounts for multiple beneficiaries with a credit union, it's a good idea to review the trust documents with the credit union to make sure you understand exactly which share balances are insured.
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