Regardless of the type of financial institution you join, you may have heard the phrase ‘insured by the FDIC’ or ‘insured by the NCUA’ but what do these actually mean? While the two are very similar, they each protect different aspects of financial institutions.
WHAT IS THE FDIC?
The Federal Deposit Insurance Corporation (FDIC) is an organization that was created in the 1933 following the bank failures of the 20’s and 30’s. Its main goal is to protect the funds of depositors up to $250,000. They are also responsible for enforcing rules and policies for banks and require periodic reports that they are being followed.
WHAT IS THE NCUA?
The National Credit Union Association is very similar to the FDIC in that their main purpose is to protect deposits. However, instead of banks, their focus is on credit unions. It was founded in 1970 in order to manage the oversight of the booming credit union expansion. They also monitor the soundness of federally insured credit unions and conduct risk assessments for state-chartered credit unions.
WHY DO WE NEED THEM?
Not only do both of these organization protect yourself and your individual financial institution, they also help protect the economy in the event of a recession or failure. They also ensure that your financial institution is following the procedures and consumer laws that have been set in place.