The Question Is Raised Again: Is My Money Safe?
The closure on July 11th of Pasadena-based IndyMac Bancorp has once again sent shivers down the spine of many across the country. Even those who’ve never deposited as much as a dime with IndyMac are wondering “just how safe is my money?”
We blogged about this topic back in January when people were feeling jittery about what was going on with Countrywide. Of course, Countrywide didn’t go under. Bank of America stepped in and bought them, essentially rescuing the mortgage lender and getting a pretty good deal in the process (BoA got Countrywide for around a 0.76 percent discount).
What happened with Countrywide and now IndyMac is directly related to the sub-prime mortgage meltdown. Why are we surprised? Many experts told us it was coming. But let’s put things in perspective: the failure of these two mortgage lenders doesn’t mean that every financial institution across the country is in trouble. Still, you may be wondering about the safety of your own deposits at a credit union. Are they insured or not?
The answer is emphatically—Yes! Your deposits are federally insured at a credit union. The equivalent of the FDIC for credit unions is the NCUSIF (National Credit Union Share Insurance Fund), overseen by the NCUA (National Credit Union Administration), the regulatory agency for federal credit unions. In the same way that bank deposits are insured for up to $100,000 and certain other accounts (such as IRAs) for up to $250,000, so are credit union deposits.
http://www.ncua.gov/ShareInsurance/Index.htm
On July 14th, NCUA Chairman JoAnn Johnson released a statement saying,
“Member deposits in federal and almost all state chartered credit unions are federally insured by the NCUA, through the National Credit Union Share Insurance Fund (NCUSIF). NCUSIF is backed by the full-faith and credit of the United States Government. Consumers who have federally insured funds in credit unions should rest assured that their deposits are safe up to at least $100,000 per account, with additional coverage of up to $250,000 for certain retirement accounts.”
Here are some additional facts that you may want to consider:
• Not one penny of insured savings has ever been lost by a member of a federally insured credit union. (Note: While Tech CU is not federally chartered, we are federally insured.)
• All credit unions must be insured by the NCUA, and no credit union may terminate its federal insurance without first notifying its members. The NCUSIF is backed by the full faith and credit of the United States government.
• Credit unions that are insured by the NCUSIF must display the official NCUA insurance sign in their offices:
So what do you do if you have more than $250,000 invested with a credit union? Here’s what the NCUA has to say:
Generally, if a credit union member has more than one account in the same credit union, those accounts are added together and insured in the aggregate. There are exceptions, though. You may obtain additional separate coverage on multiple accounts, but only if you have different ownership interests or rights in different types of accounts and you properly complete account forms and applications. For example, if you have a regular share account and an Individual Retirement Account (IRA) at the same credit union, the regular share account is insured up to $100,000 and the IRA is separately insured up to $250,000. However, if you have a regular share account, a share certificate, and a share draft account, all in your own name, you will not have additional coverage. Those accounts will be added together and insured up to $100,000 as your individual account. Additionally, shares denominated in foreign currencies are insured as outlined in NCUA Rules and Regulations.
Coverdell Education Saving Accounts, formerly education IRAs, are insured as irrevocable trust accounts and will be added to a member’s other irrevocable trust accounts and insured up to the SMSIA. Roth IRAs will be added together with traditional IRAs and insured up to $250,000.
Additional coverage is available on revocable trust or payable on death accounts. You can now name a parent or sibling as a beneficiary to get separate coverage. Previously, beneficiaries had to be a spouse, child or grandchild.
For more information on how your accounts are insured, click here.
