Question: Funds deposited in both federally insured banks and credit unions are backed up to $250,000 by the “full faith and credit of the U.S. Government.” Are banks and credit unions covered by the same insurance fund?

Answer: Credit unions are insured by the National Credit Union Share Insurance Fund or NCUSIF. Unlike the banks’ insurance fund the FDIC, which is a premium-based insurance fund, the NCUSIF is regulated by the NCUA and operates more like a cooperative. Each federally insured credit union (which includes all Montana credit unions) must keep 1% of its insured deposits in the fund. As a credit union grows, so does its contribution to the fund.

Credit unions are ultimately the sole source of dollars for the fund, so if (as in the past year) the NCUA determines that the fund is running too low because of claims or potential losses, the agency can require credit unions to pay additional money into the fund to return the fund to solvency.