You may be familiar with the phrases "insured by NCUA" or "insured by FDIC." But what do these actually mean? While these two organizations are similar, each protects different aspects of financial institutions.
What Is the NCUA?
The National Credit Union Administration (NCUA) is federal agency created in 1970 to manage and oversee the booming credit union expansion. One of its more well-known functions is to protect the deposits of credit-union members up to $250,000. The NCUA also monitors the soundness of federally-insured credit unions and conducts risk assessments for state-chartered credit unions.
What Is the FDIC?
The Federal Deposit Insurance Corporation (FDIC) was founded in 1933 following the bank failures of the 1920’s and 1930’s. Similarly to the NCUA, one of the primary purposes of this federal agency is to protect consumer deposits up to $250,000. Instead of credit unions, however, the FDIC's focus is on banks. The agency also enforces banking regulations and requires periodic reports to ensure the rules are being following properly.
Why Do We Need Them?
Not only do both of these organizations protect you and your financial institution, they also help protect the economy in the event of a recession or failure. They also ensure that your credit union or bank is following the procedures and consumer laws that have been set in place.