Recent events in the financial industry have prompted some credit union members to question the safety of their shares and deposits. Credit unions doing business in Texas are required to have share insurance protection on their share and deposit accounts. In most credit unions, members have federal share insurance through the National Credit Union Administration (NCUA). The NCUA’s share insurance fund is called the National Credit Union Share Insurance Fund (NCUSIF). As with the FDIC, the NCUSIF is backed by the full faith and credit of the United States Government.
Basic Federal Share Insurance Coverage
Based on recent action by Congress, the NCUSIF now provides credit union members up to $250,000 in coverage for their individual share and deposit accounts. These accounts include savings, checking, and certificate accounts. Individuals with account balances totaling $250,000 or less at a federally insured credit union have full NCUSIF coverage. Certain retirement accounts, such as Individual Retirement Accounts, are also federally insured up to $250,000 per member per federally insured credit union.
For share insurance information from NCUA, see https://www.mycreditunion.gov/Protect/Pages/SI.aspx for the Share Insurance Toolkit.
Additional Share Insurance Coverage
If you have more than $250,000 in an individual credit union, you may want to use the NCUSIF estimator available at https://mycreditunion.gov/insurance-estimator to determine the extent of insurance coverage on your accounts. Additional insurance coverage is available based on rules from NCUA regarding joint accounts and retirement accounts. You should also call your credit union to discuss share insurance coverage in excess of $250,000 per individual.
Frequently Asked Questions (FAQ) about Share Insurance
The NCUA has a FAQ about share insurance, available at: https://www.mycreditunion.gov/estimator/Pages/info.aspx
State-chartered credit unions incorporated or doing business in Texas are regulated by the Credit Union Department, while federally-chartered credit unions are regulated by the National Credit Union Administration (NCUA). Although there are many similarities between the two charters, each regulatory agency operates under its own credit union statutes, rules and regulations.
Both credit unions and banks are depository institutions and offer consumers many of the same services. However, a credit union is a nonprofit corporation organized and owned by its member depositors solely for the benefit of its members. A credit union operates under the authority of and receives its powers from state or federal statutes. State-chartered credit unions in Texas operate in accordance with the statutory requirements included in the credit union section of the Texas Finance Code. Funds on deposit in a credit unions doing business in Texas are either federally-insured by the National Credit Union Share Insurance Fund (NCUSIF) or have private insurance through American Mutual Share Insurance.
A bank is a business entity organized and doing business to earn a profit for its owners by providing financial services to the general public. Control of a bank is usually maintained by stockholders with the largest investment in the bank. Unlike credit unions, bank depositors have no say or control in the operation of the bank. The Federal Deposit Insurance Corporation (FDIC) insures bank deposits. State-chartered banks operate under the banking provisions of the Texas Finance Code.
Each credit union is made up of individuals within certain communities of interest. These communities are commonly referred to collectively as a credit union’s “Field of Membership” (FOM). If you are within that FOM, you are eligible to join. You are not limited to membership in one credit union but may join any credit union if you fall within its FOM. The Cornerstone Credit Union League can assist you in determining and locating a credit union for which you are eligible by calling (800) 442-5762, Ext. 6483.
Federal Regulation CC (Availability of Funds and Collection of Checks) governs the time federally insured financial institutions may hold check deposits before making the funds available to the depositor. The purpose of this regulation is to balance the credit union’s risk of loss through theft by fraud with the member’s need for access to his or her funds. Depending on the type of check, the amount of the check and whether it is defined as local or non-local, the hold may vary from one day to the date the institution actually collects the funds. Credit unions are required to disclose their funds availability policy at all locations where deposits are accepted.
Mutual fund shares and annuities purchased at a credit union are not federally-insured. The mutual funds carry the same risk as any other mutual fund shares, including the possible loss of principal. Annuities are generally issued by an insurance company and are only as safe as the insurance company underwriting them. Your credit union should be able to provide you with information concerning the insurance company’s financial condition.
Yes. If you have an account and a loan at the same credit union, and you are delinquent in your loan payments, the credit union generally has a right to access your personal account without notification and withdraw the funds necessary to bring the loan current. This is normally addressed in the loan agreement and/or membership agreement under which you assign a security interest in your accounts to the credit union. The credit union also has the right to apply funds in your account to any indebtedness you have to the credit union under a statutory lien or the right of set off. “Set off” is a concept whereby mutual debts are offset against each other. For example, if you have money in a deposit account with the credit union, it “owes” you that money. When you owe the credit union money, set off enables the credit union to recover its debt “from” you by canceling its debt “to” you. In other words, one offsets the other.
In most credit union loan documents there is a clause referred to as cross–collateralization, that authorizes the credit union to retain the collateral given for one loan until all loans with the credit union are paid in full. This clause generally also allows the repossession of the collateral (in this case the car) if you are delinquent on any of your loans with the credit union. The actual terms of your loan agreement(s) would control in each case.
Under Federal Regulation E (Electronic Funds Transfer Act), the extent of a member’s liability on unauthorized ATM transactions may be limited to the first $50 withdrawn. Depending on the circumstances such as how long the member takes to report a loss of an ATM card or unauthorized transactions, liability could be greater. If, however, someone to whom the member supplied the card and personal identification number performs the transactions, then the transactions are generally considered to have been authorized.
The member is responsible for notifying the credit union immediately when unauthorized transactions are discovered, which initiates an investigation by the credit union.
If you have a problem, you should first try to resolve it directly by contacting an officer of the credit union. Frequently, a complaint is merely the result of a miscommunication or misunderstanding that can be easily resolved. Credit unions value their members and in most situations will be responsive to your concerns. If you are unable to resolve your complaint with the institution directly, you may contact the Credit Union Department. Please see the “Complaints” section of this website for more information regarding the form of the complaint and how we can help.
An account is inactive if for more than one year there has not been a debit or a credit to an account because of an act by the member and the member has not communicated with the credit union. The automatic crediting of dividends or interest to the account by the credit union does not count to keep the account active. The Code does not require a credit union to notify the member when an account becomes inactive. Section 73.003(a) of the Texas Property Code prohibits a credit union from service charging an inactive account.
You may contact the credit union or the Unclaimed Property Division of the Comptroller of Public Accounts at (800) 654-3463 or on the web http://www.window.state.tx.us (as per the Texas Administrative Code Section 1134).