Is My Money Safe in a Credit Union During a Recession? (2024)

The world’s been through a lot in the past couple of years. The pandemic, overseas military invasions, rising gas prices, increasing inflation rates and other unstable forces can affect people’s finances.

Also, as of summer 2022, the U.S. technically entered a recession. Understandably, many Americans are concerned about the stability of their money.

During times of recession, it’s normal to watch investment values drop as the economy contracts. Some people wonder where the best place to store their money is to protect its value amid economic uncertainty.

One way to ensure your money stays safe is to deposit it in a credit union. Credit unions protect members’ finances, whatever the market conditions are, including during a recession. Learn how a credit union can safeguard your finances during a recession.

What Is Considered A Recession?

The general definition of a recession is two consecutive quarters of economic contraction. That placed the U.S. in a recession in September 2022.

However, theNational Bureau of Economic Research defines a recessionas a significant decline in economic activity that lasts several months. If you experienced the Great Recession that began in 2007 and lasted through 2009, you might be questioning the severity of what we’re experiencing today and whether or not it’s really a recession. Economists are currently debating the issue, too.

In August 2021, aReuters poll of economistsfound respondents said there’s only a 45% chance of a U.S. recession within a year and a 50% chance within two years. The poll also found respondents said if there is a recession, it will be shallow and short.

Whatever is happening in the market today, financial markets are never predictable long-term. It’s helpful to know your options in case the country does experience a recession that’s as severe or worse than ones that have happened in the past.

Are Credit Unions Safe During A Recession?

During the Great Recession, thenet worth of U.S. households and nonprofit organizations decreasedfrom $69 trillion in 2007 to $55 trillion in 2009, according to Federal Reserve History. Many American families watched their wealth plummet in their retirement and investment accounts, while unemployment rates rose during this period.

Stocks, mutual funds and other investments aren’t guaranteed in a recession. But money held in a federal credit union, and most state-chartered credit unions, is protected.

Credit unions are regulated by the National Credit Union Administration (NCUA), the federal insurer of credit unions. Federally insured credit union deposits are insured up to at least $250,000 per individual depositor, according to the NCUA. That includes money in:

  • Checking accounts
  • Savings accounts
  • Certificates of deposit (CDs)
  • Money market accounts

Any insured funds are typically available to members within a few days if a credit union closes. If an individual has more than $250,000 at a single credit union,additional share insurance coverage options are available. These include coverage for:

  • Retirement accounts, including traditional and Roth Individual Retirement Accounts (IRAs) and KEOGH retirement accounts
  • Joint accounts
  • Trust accounts
  • Revocable trusts
  • Irrevocable trusts

Coverage for credit union accounts is provided by the National Credit Union Share Insurance Fund (NCUSIF). Talk with your credit union about what options are available to you.

Individuals with more than $250,000 to deposit may also choose to deposit money among several credit unions. That way, they can ensure all their funds are within the insured credit union limits.

Are Credit Unions Safer Than Banks During Recession?

Banks, like credit unions, are also federally insured and protect depositors’ money. TheFederal Deposit Insurance Corporation(FDIC) protects bank money similarly to how the NCUA protects credit union members’ deposits.

The FDIC provides bank deposit coverage for up to $250,000 in individual accounts and $250,000 per owner in joint bank accounts for products including checking and savings accounts, money market accounts and CDs. If a bank closes during a recession, the money is typically transferred to another bank with FDIC insurance, or the former bank member will receive a check for the fund amount.

However, there are some key advantages to depositing money in a credit union rather than a bank. For example, in 2021, CNBC reportedcredit unions tend to lend more in loan amountscompared to commercial banks during recessions. Since credit unions’ missions are to serve their local communities, they’re more likely to be in your corner during economic uncertainty compared to a big national bank.

Also, a 2022 report by the Ascent stated research showscredit unions are less likely to fail compared to banks during recessions. If you want a financial partner that you’re more likely to be able to stick with long-term, even during economic uncertainty, credit unions tend to fare better than banks.

Keep Your Money Safe With Arizona Central Credit Union

Recessions can be stressful, especially when you’ve accumulated savings you want to rely on in the long run. When you deposit money with a credit union like thefederally insured Arizona Central Credit Union, you can rest assured that your deposit of up to $250,000 is completely protected, no matter the economic conditions. If you want to deposit more money in other types of accounts, you may have additional options for coverage.

Learn more about Arizona Central Credit Union’sbanking products. Contact us if you have any questions about our credit union and how we can serve you. We’re here to help.

Is My Money Safe in a Credit Union During a Recession? (2024)


Is My Money Safe in a Credit Union During a Recession? ›

Credit unions are insured by the National Credit Union Administration (NCUA). Just like the FDIC insures up to $250,000 for individuals' accounts of a bank, the NCUA insures up to $250,000 for individuals' accounts of a credit union. Beyond that amount, the bank or credit union takes an uninsured risk.

Is a credit union safe in a recession? ›

bank in a recession, the credit union is likely to fare a little better. Both can be hit hard by tough economic conditions, but credit unions were statistically less likely to fail during the Great Recession. But no matter which you go with, you shouldn't worry about losing money.

Where is my money safest during a recession? ›

Cash equivalents include short-term, highly liquid assets with minimal risk, such as Treasury bills, money market funds and certificates of deposit. Money market funds and high-yield savings are also places to salt away cash in a downturn.

Are credit unions safer from failure than banks? ›

However, because credit unions serve mostly individuals and small businesses (rather than large investors) and are known to take fewer risks, credit unions are generally viewed as safer than banks in the event of a collapse.

Are credit unions at risk of collapse? ›

Experts told us that credit unions do fail, like banks (which are also generally safe), but rarely. And deposits up to $250,000 at federally insured credit unions are guaranteed, just as they are at banks.

What happens to credit unions if banks collapse? ›

If the bank fails, you'll get your money back. Nearly all banks are FDIC insured. You can look for the FDIC logo at bank teller windows or on the entrance to your bank branch. Credit unions are insured by the National Credit Union Administration.

What happens if a credit union goes bust? ›

Also known as a liquidation estate. If the member shares are not assumed by another credit union, all verified member shares are typically paid within five days of a credit union's closure. No member of a federally insured credit union has ever lost a penny in insured accounts.

Can banks seize your money if the economy fails? ›

The short answer is no. Banks cannot take your money without your permission, at least not legally. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per account holder, per bank. If the bank fails, you will return your money to the insured limit.

What not to buy during a recession? ›

Don't: Take On High-Interest Debt

It's best to avoid racking up high-interest debt during a recession. In fact, the smart move is to slash high-interest debt so you've got more cash on hand. Chances are your highest-interest debt is credit card debt.

Can you lose your savings in a recession? ›

Recessions can impact your savings in many different ways. Lower interest rates, stock market volatility, and potential job loss can drain your savings. Diversifying your investments, building an emergency fund, and opening a high-yield savings account can help protect your savings.

What are the negatives of a credit union? ›

Credit unions tend to have fewer branches than traditional banks. A credit union may not be close to where you live or work, which could be a problem unless your credit union is part of a shared branch network and/or a large ATM network such as Allpoint or MoneyPass.

Are any credit unions in financial trouble? ›

National Credit Union Administration (NCUA) credit unions had seven conservatorships/liquidations in 2022 and two so far in 2023. While credit unions have experienced several failures in 2022, there were no Federal Deposit Insurance Corp.

Why do banks not like credit unions? ›

For decades, bankers have objected to the tax breaks and sponsor subsidies enjoyed by credit unions and not available to banks. Because such challenges haven't slowed down the growth of credit unions, banks continue to look for other reasons to allege unfair competition.

Is a credit union safer than a bank right now? ›

Generally, credit unions are viewed as safer than banks, although deposits at both types of financial institutions are usually insured at the same dollar amounts. The FDIC insures deposits at most banks, and the NCUA insures deposits at most credit unions.

Who are the top 5 credit unions? ›

The largest credit unions in the U.S. include Navy Federal, State Employees', PenFed, Boeing Employees', SchoolsFirst, Golden 1, America First and Alliant.

What happens when a credit union hits 10 billion in assets? ›

Once a financial institution surpasses the $10 billion threshold, the primary impact is a new realm of risk management and capital planning requirements, as well as more rigorous regulatory oversight, all of which entail significant impacts to the cost structure of a covered credit union.

How do credit unions fair in a recession? ›

Helping Members Keep Their Information Safe

Economic downturns can often bring out more shady characters looking to prey on people's anxieties about money. Credit unions offer their members the tools and resources to keep their personal information safe and spot a scheme when they see one.

What is the downfall of a credit union? ›

The pros of credit unions include better interest rates than banks, while the cons include fewer branches and ATMs.

Can the government take money from your bank account in a crisis? ›

They are able to levy up to the total amount you owe in back taxes, and the bank must comply. For many individuals, this might mean seizing everything in their entire bank account. The only way you are able to release a levy due to hardship is if you make a satisfactory resolution.

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