Credit union share accounts are safe and sound, insured by the National Credit Union Share Insurance Fund (NCUSIF), administered by the National Credit Union Administration (NCUA). This fund, separate from the FDIC, is supported by credit unions, not taxpayer dollars. The fund has never had a negative balance and remains extremely healthy with the legal limit being held in reserves.
How the credit union difference improves safety and soundness:
- As cooperative institutions, credit unions are democratically controlled by the members.
- Credit unions as financial cooperatives invest their money primarily in small consumer loans to their members.
- Credit unions are prohibited by law from investing in leveraged buyouts, loans to third world countries or speculative land deals.
- Every member is a shareholder with a vote in the operation of the credit union.
- Operating costs are lower in part because board members are trained volunteers.
- Not-for-profit credit unions tend to be conservatively run because members manage their own money.
- Personal loans predominate. Car loans and small personal loans account for more than half of credit union lending. As a result, the average loan delinquency for credit unions in the United States is around one percent of total loans.