One of the nicest and most comforting things about opening a money market account with your bank is knowing that your money is insured by the Federal Deposit Insurance Corporation (FDIC). Created as a response to personal financial losses during the Great Depression, the FDIC insures personal accounts up to $250,000 – but this will drop down to $100,000 on January 1, 2010; only certain retirement accounts will remain insured up to $250,000. But what if you decide to open your money market account through a credit union? After all, credit unions are not insured by the FDIC. So are they a riskier bet? Not at all. Checking, banking and money market accounts in credit unions are insured by another federal agency, the National Credit Union Administration (NCUA).
The NCUA is responsible for overseeing and regulating the nation’s credit unions, which are different from banks. It has a program in place that’s comparable to the FDIC’s: the National Credit Union Share Insurance Fund (NCUISF). Created in 1970, credit unions pay a monthly premium into it which creates a fund that protects the entire industry – and your credit union checking and savings and money market accounts. The NCUISF works just like health insurance or car insurance: credit unions pay their premium every month in case they ever need it some day. Hopefully they won’t, but if they do, the NCUA well step up to the plate and pay their percentage. This is a very reassuring thing when it comes to your money, whether it’s in your checking, savings, or money market accounts.
Before you open a money market account, whether through a bank or a credit union, be sure to sit down with a trusted financial advisor, bank representative, or credit union representative and go over all the details of your money market account. It’s important to note that there are a few special credit unions out there which are not covered by the NCUA. The bottom line is that when it comes to your money, you can never ask too many questions or have too much information. Informed choices are smarter choices.