The National Credit Union Administration oversees credit unions in the US, sets policy, and insures deposits through the National Credit Union Share Insurance Fund. Credit unions are cooperatively owned, share profits with members, and are generally safe. The NCUA was established in 1934 to protect consumers from credit union failure, and credit unions with NCUA charters are backed by the NCUSIF.
The National Credit Union Administration (NCUA) is a federal agency in the United States that oversees credit unions. Issues letters to new credit unions, sets credit union policy, and insures credit union deposits through the National Credit Union Share Insurance Fund (NCUSIF). The goal of the NCUA is to keep credit unions in the United States healthy and strong, and to protect the people who deposit their money in credit unions by ensuring that credit unions remain safe.
Credit unions are cooperatively owned financial institutions controlled by their members. Credit union members can deposit funds, borrow money, participate in investments, and engage in a variety of other financial activities with their credit union accounts. Unlike a bank, a credit union shares its profits with its members by issuing dividends quarterly or annually. Credit unions are generally very safe places to keep money and tend to be more community oriented than banks.
The NCUA was established in 1934 as part of the Federal Credit Union Act. This act of Congress was designed to legislate the business of credit unions in the United States to protect consumers from the failure of credit unions. It was one of a series of laws passed in the aftermath of the Great Depression to prevent such an event from happening again. Under the terms of the Federal Credit Union Act, NCUA is administered in five different regions, and is administered by a three-member Board of Directors appointed by the President.
When a group wants to open a credit union, they apply to the NCUA for a charter. If a credit union does not have an NCUA charter, depositors should know that it is not backed by the full faith and credit of the United States government, and they could lose their deposits. Credit unions with NCUA charters are backed by the NCUSIF, an organization similar to the Federal Deposit Insurance Corporation (FDIC).
Depositors considering credit unions are sometimes told they should stay with banks because credit unions are not FDIC insured. While this is technically true, it ignores the fact that credit unions have their own version of the FDIC, and the NCUSIF is actually a very strong fund, with credit unions typically depositing money in excess of the requirements. Using an NCUA credit union may also be safer than using a bank in some situations, because credit unions generally buy from each other rather than allow themselves to fail, working cooperatively to maintain the network of credit unions.
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