Your safest bet:
Your Credit Union, the Bank, or Your Mattress
You can't turn on the news without hearing of it: The Economy. Are
we in recession, or are we not? What about this sub-prime mortgage
crisis? And all those letters: FDIC, NCUA, NCUSIF. Followed by
the really big question: Is my money safe?
The simple answer: YES.
Okay, but why, and how? Before we dig into that, lets get a little history
lesson. Everyone is talking about this, but no one goes back to
point out the differences between the Great Depression and today.
The last time there were “runs” on the bank was back in the 30's.
Unemployment was at an unbelievable high of over 25%1 (the US
currently hovers around 5%2) and in the early months of 1933 alone,
over 4,000 banks closed3 due to the amount of debt held by the
American public and businesses. To put it mildly: it was a really bad
time. And while the doom and gloom news reports may make you
feel like we're back in really bad times, don't be fooled. While gas
and food prices are painful to the wallets, measures have been put in
place to ensure that the bank failures and money losses of 75 years
ago won't happen again.
Now on to the letters: FDIC, NCUA, and NCUSIF. The FDIC and
NCUA are similar organizations, but they cover different arenas.
NCUA and NCUSIF go together. Confused? Don't be. Here's what
those letters all stand for:
FDIC: Federal Deposit Insurance Corporation
NCUA: National Credit Union Administration
NCUSIF: National Credit Union Share Insurance Fund
How FDIC and NCUA are similar: When you take your money to a
bank or credit union, the money you deposit is insured against losses.
At a bank, your money is insured by the FDIC, and at a credit
union by the NCUSIF through NCUA. The FDIC and
NCUSIF are federally funded: your tax dollars pay for the “insurance” and make sure the money you deposit will
always be safe. Now, there are some limits. With both
FDIC and NCUSIF your money is insured to $100,000.
This single amount covers all of the accounts that you
have at your financial institution. So, if you have a
savings account, a checking account, and a
Certificate of Deposit, as long as the total in
those accounts is less than or equal to $100,000,
every single penny of your deposits are
insured. If you have a
person joint on one
or more of those
accounts, your totals
could be increased to
$200,000 coverage
($100,000 per account holder). If
you have retirement accounts such as IRAs (Individual Retirement
Accounts), those accounts are separately insured up to $250,000.
More information on NCUA and NCUSIF can be found by going to www.ncua.gov, or you can call or stop by the Credit Union. We're
happy to help you muddle through the terms to help you determine if
your deposits are adequately covered. The NCUAWeb site also
offers a helpful “Share Insurance Estimator,” which can help you
estimate your coverage. The FDIC site also offers a similar program
for your bank deposits.
So, back to the original question: Bank, Credit Union, or Stuffed in
the Mattress? Our admittedly biased answer? Credit Union, then
bank. Never mattress. Why? Well the mattress is never going to pay
you dividends on your savings. So your money will literally just lie
there. When you deposit in a credit union your money will grow, so
that you'll have more money. And who doesn't want that? Why credit
unions over banks? And this is not a biased answer, it's fact.
Because of the not-for-profit cooperative nature of credit unions, our
savings rates are typically higher, so your growing money grows
even faster when on deposit with us!
One final note on the safety of your money in a credit union. “Not
one penny of insured savings has ever been lost by a member of a
federally insured credit union.”4, and because of the NCUSIF, we
intend to keep it that way.
1. Wikipedia.org “The Great Depression”
2. US Dept of Labor Statistics, June 10, 2008
3. FDIC
4. NCUA
