If you see a website advertising a very high rate on a certificate of deposit or something else that looks like a bank account, you should first determine if the website is from a FDIC or NCUA insured institution. Both FDIC and NCUA are agencies of the US federal government. FDIC covers banks and NCUA covers credit unions.
Not only do FDIC and NCUA provide protection for depositors against bank/credit union failures, but also ensure a level of standards. Being a member of FDIC or NCUA ensures that the institution meets a long list of regulations (see FDIC regulations and NCUA regulations). Many of these regulations are designed to protect customers. Foreign banks may be legitimate, but it's hard to know what standards they are required to follow.
For most of my posts, I include a link to the FDIC or NCUA page which shows the government information about the institution. One important piece of information is the URL of the institution. This can help verify that the website really belongs to the institution. Just click on my FDIC or NCUA link on the bottom of the posts.
If you're trying to determine if a bank is FDIC insured, go to the FDIC's Bank Find Page.
For credit unions, go to the NCUA's Find a Credit Union Page.
A few credit unions are not insured by the NCUA. All of these that I'm aware of have private insurance by ASI. These are legitimate credit unions. You can verify that a credit union is ASI insured from the ASI's Credit Union Search Page.
[Edit 1/31/08: Updated ASI info. Patelco Credit Union is no longer privately insured by the ASI. It's now federally insured by the NCUA.]
[Edit 2/08/09: Updated URL to ASI search page.]
[Edit 5/28/09: Updated URLs to NCUA pages.]
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Comments (16)
When is a CD Rate Too Good to Be True? Verifying FDIC or NCUA Membership
Tuesday, January 30, 2007 - 8:06 PM CT by Ken - Bank Deals Guy
Tags: banking news
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Anonymous - #1, Tuesday, January 30, 2007 - 9:57 PM CT
Very good information. I checked on GMAC bank and FDIC site shows GMC bank in PA is inactive. Should we concern??
http://www2.fdic.gov/idasp/main_bankfind.asp
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Anonymous - #2, Tuesday, January 30, 2007 - 10:03 PM CT
You should be concerned only if you failed to read the notice mailed to your house that informed you that the PA bank would be merging with the UT bank.
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Anonymous - #3, Tuesday, January 30, 2007 - 11:10 PM CT
I didn't get that notice? What did it say?
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Anonymous - #4, Tuesday, January 30, 2007 - 11:52 PM CT
It said that the PA bank is merging with the UT bank and the UT bank is the surviving bank. No action on your part is required. All your checks are still valid and your account number stays the same. If you already had an account at the UT bank, check to make sure the merger doesn't put you over the FDIC insurance limit at one bank. Call customer service if you have any questions.
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Anonymous - #5, Tuesday, January 30, 2007 - 11:58 PM CT
Excellent essay.
However, that private insurance outfit makes me very nervous. The NCUA is backed by the full faith and credit of the US government, as is the FDIC.
It is apparently cheaper for a CU to use private insurance instead of NCUA insurance. One hopes that the auditing is not looser.
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