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An illustration of stacks of deposits.
An illustration of stacks of deposits.
An illustration of stacks of deposits.

How to insure deposits up to $2.5 million.

Published March 20, 2020.

10 times federal insurance protection for your money.

You may have heard that your deposits at STCU and other federally insured credit unions is insured by NCUA up to $250,000.

That, we are happy to report, is true.

But did you know that, with savvy structuring of your savings, a family of three could protect up to $2.5 million?

That's also true. And in a moment, we'll explain how. But first, five things you should know:

  1. No member of a federally insured credit union (such as STCU) has ever lost a penny of insured deposits. So, the safest place for your cash is at the credit union!
  2. NCUA, or National Credit Union Administration, is an independent agency of the U.S. government, which means your insured deposits are backed by the federal government.
  3. Your savings, checking, certificate, IRA, and trust accounts can be insured by NCUA. But investment products such as mutual funds, annuities, and insurance cannot.
  4. Accounts you may have at other credit unions do not affect your NCUA insurance coverage at STCU.
  5. Your money is automatically insured when deposited at STCU. However, it's a good idea to periodically review the structure of your deposits (like you're doing right now!) to ensure that all your funds are adequately insured.

How to insure up $2.5 million.

Structuring your family fortune to maximize NCUA insurance protection is easy once you understand the rules. For example:

  • Each account owner's deposits are insured up to $250,000.
  • If you have a joint account, you could insure an additional $250,000, and your partner can insure $250,000, for a total of $500,000.
  • If you have an IRA, it's separately insured up to $250,000.
  • If you have a trust account, it's separately protected for another $250,000.

All those exceptions to the "insured to $250,000" promise can really add up!

For example, imagine that Mary has $250,000 in her STCU First5 Savings Account, $20 in her checking account, and $250,000 in her STCU Roth IRA. The saving and IRA accounts are separately insured, so Mary is federally insured by NCUA up to $500,000. However, her $20 in checking is not separately insured, because checking and savings balances are counted together.

Next month, however, Mary decides to marry Larry, who has an eight-year-old daughter named Contrary. Mary and Larry open a new joint STCU checking account and deposit $500,000 of Larry's money, and another $250,000 into a new savings account for Contrary. (Lucky girl!)

In this case, the entire $500,000 in their joint checking account is federally insured, because half is assigned to Mary and half to Larry. (They signed their signature cards at the branch to create equal joint ownership.) In addition, all $250,000 owned by Contrary is also insured. Combine all these balances with what Mary already had in her personal account described above, and the family's total deposits are insured by NCUA for $1.25 million!

No one has ever lost a penny of federally insured deposits.

Do your homework.

Confused? Don't worry. Take a look at the chart below created by the NCUA that shows how a family of three could insure up to $2.5 million by carefully structuring their accounts, with money in individual accounts, joint accounts, and trust accounts (you might need an attorney for those).

NCUA deposit insurance chart for a family of three.

Are business accounts insured?

Yes, business accounts are federally insured by NCUA up to $250,000.

However, any personal funds that the owner keeps in the business account will count toward the $250,000 limit of the business. If the owner puts that money in a separate, personal account, then it will not be combined with the business and both accounts will be federally insured up to $250,000.

If you have questions about NCUA insurance at your business, please contact STCU's Special Deposit Services at (509) 344-2960.

More resources

If you love this kind of financial spelunking, you should read the NCUA "Your insured funds" brochure. It's packed with dozens of examples and rules for structuring your deposits to maximize federal insurance. The possibilities are almost endless!

Or try the NCUA's share insurance estimator ("shares" is credit union talk for money) to run your own calculations and check if your deposits are adequately insured.

Why should I bother?

Is it worth the time to review how your money is structured at STCU or other financial institutions? We think so.

While banks and credit unions rarely fail — and regulators have faithfully protected depositors from losses — it's ultimately your responsibility to decide how and where to invest your money. The STCU staff is happy to help you review and determine how to maximize NCUA insurance protection for your money, but the final decision will always be yours.



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