FDIC vs NCUA: Difference and Comparison

The Federal Deposit Insurance Corporation, known as FDIC, is a federal deposit insurance plan. The NCUA is also a federal deposit insurance organization similar to FDIC.

FDIC is the insurer or the regulator of banks, in the very same way NCUA is the insurer of credit unions.

All the banks are not FDIC – insured, and all the credit unions are also not NCUA insured. The federal government guarantees both FDIC and NCUA.

Key Takeaways

  1. FDIC insures deposits at commercial banks, while NCUA covers credit unions.
  2. Both offer a maximum insurance coverage of $250,000 per depositor per institution.
  3. FDIC is a federal agency, whereas NCUA is an independent federal agency.

FDIC vs NCUA

The FDIC (Federal Deposit Insurance Corporation) is an independent agency of the U.S. government that provides deposit insurance to protect bank customers’ deposits in case of a bank’s failure. The NCUA (National Credit Union Administration) is an independent agency of the U.S. government that provides deposit insurance to protect credit union members’ deposits in case of a credit union’s failure. 

FDIC vs NCUA

FDIC maintains a reserve of cash to pay off depositors in case of bank failure. It is an insurance program funded by all the banks that are insured by FDIC. Furthermore, FDIC also plays a role as a bank regulator.

It was founded in 1933, and thousands of banks are FDIC insured.

National Credit Union Administration (NCUA) is a deposit insurance program that regulates credit unions. It’s also in the hand of the NCUSIF, which utilizes tax dollars to ensure savings. NCUA was founded in 1970.

It’s a three-member board agency headquartered in Alexandria. In case of the failure of a credit union, the NCUA pays the deposit of insurance to the depositor.

Comparison Table

Parameters of Comparison  FDIC  NCUA  
Stands for  Federal Deposit Insurance Corporation.  National  Credit Union Administration.  
What is itFDIC is a financial agency regulated by the government which insures customer deposits in banks.  NCUA is a nonprofit institution established to protect accounts at federal credit unions.  
Insurance  The insurer of banks.  The insurer of credit unions.  
Purpose  The purpose of FDIC is to maintain the confidence of the public in the financial system of a nation.  The purpose of NCUA is to regulate federal credit unions and to protect the funds of their members.  
Establishment  FDIC was established in 1933.  NCUA was established in 1970.  
Profit  It’s a for-profit financial organization, does not share its profit.  It’s a not-for-profit financial institution.  

What is FDIC?

The Federal Deposit Insurance Corporation (FDIC) is a government department that insures bank deposits. It was founded in 1933 to maintain financial stability in public. If any FDIC-insured institution fails, then the FDIC steps in to protect the funds.

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It maintains a reserve of cash to pay off depositors in case of bank failure. It also plays a role as a bank regulator. It was established during the years of the Great Depression when many American banks collapsed.

FDIC is not a bank. It is a government-owned insurance system for banks. Generally, FDIC insures bank deposits. If your bank is FDIC insured, it should indicate somewhere on its website.

FDIC insurance covers all types of deposits received at an insured bank, such as deposits in a checking account, savings account, money market account, and also financial items, including money orders, cashier’s checks, etc.

The FDIC does not cover money invested in bonds, mutual funds, equities, and life insurance policies.

The FDIC provides Bank Deposit Insurance to nearly all customers of Retail Banking in the USA. The FDIC offered deposit insurance at 5,256 institutions in September 2019. There are also some distance ownership categories applied for FDIC.

Account categories comprise joint accounts, single accounts, retirement accounts, revocable trust accounts, employee accounts, government accounts, and so on.

fdic

What is NCUA?

The National Credit Union Administration, or NCUA, supervises credit union funds. It protects the funds in savings, checking, and money market accounts. Credit unions are similar to banks in many ways, and it’s a not-for-profit financial institutions.

The NCUA, or the National Credit Union Administration, established in 1970, allows the customer to maintain savings and checking accounts.

It is important to note that the NCUA ensures all the credit unions under NCUA. Money market accounts, share certificates, revocable trust accounts, irrevocable trust accounts, and savings accounts are protected by federal share insurance.

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It has a three-member board of directors who serve six-year of service after being appointed by the President.

The NCUSIF protects federal credit union accounts, and it insures about 98% of all credit unions in the US. It is backed by the government.

Additionally, Federal share insurance protects money in our accounts, and the NCUA frequently reviews how federal credit unions work.

If a credit union fails, the NCUA will transfer your money to another federally insured credit union.

Main Differences Between FDIC and NCUA

  1. Only credit institutions are handled through the FDIC and make use of the deposit insurance fund. NCUA, on the other hand, makes use of the National Credit Union Share Insurance Fund.
  2. FDIC stands for Federal Deposit Insurance Corporation. On the other hand, NCUA stands for National Credit Union Administration.
  3. Federal Deposit Insurance Corporation was established in 1933, on July 16. On the other hand, National Credit Union Administration was established in 1970.
  4. The FDIC regulates and insures bank deposits. On the other hand, the NCUA ensures credit union deposits.
  5. NCUA credit unions are not-for-profit financial institutions that their members manage. On the other hand, FDIC is a for-profit institution that does not share its profit with the depositors.
References
  1. https://link.springer.com/chapter/10.1007/978-94-009-3277-7_10
  2. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/fsubr14&section=6

Last Updated : 13 July, 2023

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7 thoughts on “FDIC vs NCUA: Difference and Comparison”

  1. I really appreciate the concise comparisons between the FDIC and NCUA. However, I would have liked to see the inclusion of some information regarding historical events where these organizations played a significant role.

    Reply
  2. This article leaves a lot of room for interpretation. It would have been much more pleasant if the content was more concrete. It seems like the information was plucked right out of thin air, and the citations that are provided are scarcely related to the text.

    Reply
  3. This information is nothing new. It’s like a net to catch minnows rather than any big fish. I expected something more thought-provoking, though it does cover the basics well enough.

    Reply
  4. This is a valuable explanation. It contains everything one should know about the FDIC and the NCUA. Government-backed insurance is a vital part of keeping the financial system afloat, and organizations like the FDIC and NCUA help maintain public trust in banks and credit unions. The explanations of both organizations’ purposes are vital to understanding their roles in the economy.

    Reply
    • Particularly in today’s time, where many are anxious about the security of their funds and the economy as a whole, this article provides a very informative and reassuring overview of these two federal agencies.

      Reply
  5. Oh boy, who doesn’t like a good ‘#bankingfactfriday’ read? This is a great piece. 100% would recommend to my pals. And enemies too.

    Reply
  6. For those who are not financially literate, this article is an eye-opener. The information on all different types of accounts that these agencies cover is very helpful. It is also a great relief to know that up to $250,000 is insured.

    Reply

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