In light of the recent collapses in the banking industry, namely Silicon Valley Bank, Signature Bank, and the liquidation of Silvergate Bank, there is discussion of whether a credit union might be a more safe to park one’s money.
If you take a look at https://news.cuna.org you can see that indeed, credit unions do sometimes fail, but it seems if may be with less frequency. They are not-fo-profit organizations, so any investments they make are done for the benefit of the member, not for the benefit of the organization. They are also more specialized in how one can become a member, so any collapse or liquidation is likely to be way less catastrophic.
They are not FDIC insured, but instead insured by National Credit Union Share Insurance Fund (NCUSI), and deposits are similarly insured up to $250,000 per depositor.
CUNA provided key points on the credit union difference and insurance coverage:
- As not-for-profit financial cooperatives, credit unions’ first priority is members’ financial success and security.
- Federally insured credit unions offer a safe place for credit union members to save money, deposits are protected by the National Credit Union Share Insurance Fund and insured up to at least $250,000 per individual depositor – the same as any other federally insured financial institution.
- Credit union members have never lost a penny of insured savings at a federally insured credit union.
- MyCreditUnion.gov contains more information about the National Credit Union Share Insurance Fund coverage for consumers.
From personal experience, credit unions are often able to make more favorable, common sense mortgage loans for their members.
If you are nervous about the present banking climate, you might check out one of your local credit unions.