FDIC and NCUA Explained: How Your Bank Deposits Are Insured

FDIC and NCUA insurance protect the money you keep in banks and credit unions up to $250,000 per depositor, per institution, per ownership category. Ryan explains what is covered, checking accounts, savings accounts, and CDs, and what is not, including stocks, ETFs, annuities, and crypto. The FDIC covers banks; the NCUA covers credit unions. Both work similarly.

Ryan walks through the ownership category rules, which is how you can legitimately insure more than $250,000 at a single institution by holding accounts under different titles. He also explains how spreading large cash balances across multiple banks keeps everything within insured limits. The core reassurance: no FDIC-insured depositor has lost covered funds since the agency was created in 1933. Talk to your financial advisor if you have balances that may exceed standard coverage.

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Transcript

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Welcome And Episode Setup

SPEAKER_00 0:01

Welcome to the Fiscal Physical Podcast. Join us today's week is we sit down with the founder of Alchemy Wealth Management and author of your physical physical, Ryan Nelson. Tune in to gain valuable insights and practical tips as we simplify complex financial concepts into digestible lessons. From budgeting to retirement planning, this podcast is your go-to resource for mastering financial literacy.

Aaron Hoisington 0:33

Welcome everybody to this week's episode of the Fiscal Physical Podcast. This is uh episode 114. We are here together, myself, Aaron Hoysington, and my cohort, Ryan Nelson, founder of Alchemy and Wealth Management. Uh Ryan, what's uh what's going on with you today, my man? Uh, not too much. Uh same old, same old. What about you? You know, another day, another dollar, hopefully. At least a couple of them coming in there. So uh, but no, good day. Good uh, you know, we're we're we're I'm excited to be here. I hope everybody is to be tuning in for this uh this podcast. Hopefully you're listening right when this drops on every Tuesday morning. Um hopefully it's one of your favorite podcasts that you guys uh check out as well. And uh uh Ryan, let's uh let's dive into today's topic. You ready? Let's

Today’s Focus: Who Insures Your Cash

Aaron Hoisington 1:17

do it. Cool. So we're gonna talk about, you know, we're gonna throw in some acronyms because that's always fun with these uh these podcasts here. But I think the overall topic is is pretty important about like knowing what you know who insures your money. Um, you know, the terms like FDIC, NCUA, like all these terms kind of get thrown out there about like, you know, what what are they specifically? And uh we did an episode, I think it was episode 90 back. We got a listener question about where to keep your money and where how to choose your bank and all these different things. So um I'm curious about this uh this topic to you know what is covered by these these terms F D I C N C U A and what they actually mean, I suppose. So and maybe what they don't mean as well, because sometimes I think that's almost uh as important. So I'm hoping you can kind of break that down for the listeners here and uh I'll go ahead and uh uh pause and let you take it away.

FDIC Basics And What’s Covered

Ryan Nelson 2:08

Cool. So yeah, most people when they talk about their uh you know money in the bank, they s they they assume or um infer that it's secure, right? And when people talk about their money being safe in the bank, usually what they're uh effectively alluding to is that it's the that it's a federal deposit that is insured. Um so there's really kind of two players there. It's FDIC, which is for banks, and NCUA, which is for credit unions. So FDIC, we'll start there. It stands for Federal Deposit Insurance Corporation. So FDIC is an acronym, obviously. Um again, Federal Deposit Insurance Corporation, and that insures deposited accounts um at FDIC insured banks. Um so if the bank was to fail, if I had 200 grand in an FDIC insured bank, that bank fails. Basically, this um insurance will step in and give me my 200 grand back, make me whole. Um so it it oh, and another thing is you know, so it's insurance, it's not something you have to buy. So your money being there qualifies you for having it. So that's an important uh um detail. It's not that you have to go buy FDIC insurance by having your 200 grand at that bank who is FDIC insured, that you're good. You're that that covers you. You don't have to buy a different product on your own.

Aaron Hoisington 3:19

Good to know. Yeah, that's a big piece of it. Because you think insurance, you think something else you like add on top, like, but that kind of seems like it comes with having your money in that bank. Yep.

Ryan Nelson 3:29

Um so then NCUA that stands for National Credit Union Administration. And so it's very, very similar, but it insures um credit unions, so these shared accounts at federally insured credit unions. Um, so both FDIC and NCUA, it will typically insure up to $250,000 per um depositor or member if you're a credit union at these insured places. Um per ownership category, which is an important variable that we'll talk about a little bit later. Um, but so what that is what that means is it's not $250,000 per account. So I can't go open a Wells Fargo account in my name, uh put $250,000 into it, go to a different bran Wells Fargo branch, open another account in my name and put $250,000 into it. That would still be $200, that'd be that would then for therefore be $500,000 in like an account in Ryan's name in Wells Fargo. Um so you want to be uh careful about how it's titled. And so if those two accounts

NCUA And Credit Union Parallels

Ryan Nelson 4:30

were titled the same way, it would be $500,000 at the same bank. So basically, what is covered? Um FDIC is gonna cover like checking his accounts, savings accounts, CDs, um, and some some money market accounts um that have that that are at these FDIC insured banks. Um NCUA, that's gonna cover effectively the same thing, right? Shared savings accounts, which is what credit unions call these, um, checking style accounts um and deposit accounts. So effectively the credit unions have some nuanced differences in their naming nomenclature, um, but effectively it's gonna be covering the same kind of style of accounts at both the uh kind of a more traditional bank and then the NCUA uh for credit unions. Um so what is not covered? This does not cover your stocks, your bonds, your mutual funds, your ETFs, your annuities, your life insurance, your your Bitcoin or other other cryptocurrencies. It also doesn't cover like your contents in the safety security box. Okay. Okay, you can't go put a thing of gold in your safety deposit box and think it's FDIC insured, or buy a stock from you know a Wells Fargo and think it's FDIC insured. That's just not the case. So again, it was covering the checking accounts, savings accounts, CDs, stuff like that. Um that same thing, that same concept's gonna be true for the NCUA as well. So you can see that these are very, very similar. Yeah, they're quite similar. A lot of overlap for sure. Yeah, exactly. Um let's talk it now, let's talk a little bit about those ownership categories. So I gave that example before. If I put $250,000 in one branch office of uh Wells Fargo and I go into another branch office of Wells

What Isn’t Covered By Deposit Insurance

Ryan Nelson 6:05

Fargo and put another $250,000, I just now have $5,000 in Ryan Nelson's name, right? Um what's interesting is you can have more than $250,000 at one bank and have it be insured. It just has to be in have a different ownership category. So I could have one in say just my account, my name, Ryan, and then I could open an account with you and have one in Ryan and Aaron's name and open an account with my fiance and have Ryan and Katie's, right? And those would all now have different ownership categories and have their own limits. So I could go put $200,000 in all three of these different accounts, and now I would have six hundred thousand dollars at one bank, all FDIC insured, right? Okay. Um or um you could spread this out. So again, we mentioned CDs are um insured. So sometimes when we have a client, you know, if they come to us and they need for whatever reason, you know, one or two million dollars in in CDs, it wouldn't be very responsible for us to take a million dollars and buy a bunch of Wells Fargo CDs or two million dollars and buy a bunch of Wells Fargo CDs. We'd want to spread that out and put some money at Wells Fargo, some money at Bank of America, right? And so we could buy them these different CDs at these different banks, and then you know,

Ownership Categories And Raising Coverage

Ryan Nelson 7:20

let's say we put $200,000 in five or ten different banks. Now they have one or two million dollars, all FDIC insured, right? So it's possible to have more than $250,000 of FDI insurance, just not at the same institution with the same title.

Aaron Hoisington 7:35

Right. Okay, gotcha. Yeah, that makes it that interesting. Yeah, there's ways around it, if you will, or I don't know if it's around it, but ways to to maximize it if you have an X amount of money that you want to put that's above that $250,000.

Ryan Nelson 7:48

Yep. Cool. Um so uh uh clearly there's a lot of similarities here between uh FDIC and NCUA, right? Um they're both basically federal deposit insurance. Um they have a very similar structure. It's $250,000 per person, per institution, per ownership category. So lots of similarities, right? The differences are FDIC insurance covers banks, NCUA covers credit unions, and a little bit of the tech like the jargon, right? Technically, FDIC insurance because it's for banks is covering deposits, whereas credit unions oftentimes what they call it shares. Okay. Um so but you can see those differences aren't very stark. Um, you know, you might be wondering, cool, how do I tell if this is insured? Um, so you'd want to go the best way would probably be to ask the financial institution, but typically they'll have like an FDIC or NCUA uh sticker in their like the door when you open it to go in.

Aaron Hoisington 8:44

Or you hear it on like a commercial, it's it's almost always like plastered somewhere.

Ryan Nelson 8:49

Like that a financial institution has those. Yep. Um and one thing to be aware of is some like cash accounts are actually brokerage accounts, so they're investment accounts um that are using third parties. And so um the insurance is gonna depend on where that uh money is sitting, right? So it is possible for some people to have some like sort of cash in an account that they think is FDIC insured that's actually not. So it'd be something to just be aware of and pay attention to. Um so common mistakes, right? People having kind of that example I gave earlier, having multiple accounts at the same bank. So if you have four accounts in Ryan Nelson's name, um, all with $250,000 in it, those aren't all FDIC insured. Only one would be FDIC insured. Um so you'd have to change the ownership category if you want them all at the same bank. Um there's some there can be some confusion with money market or mutual funds. Um, so just make sure that if you're investing in something at the bank, make sure you have an understanding. Uh you can just ask them, is this FDIC insured, right? Likely the money market is and likely the mutual fund isn't. But just get that confirmation. Um, you know, often again, I hear not often, but f more than once, somebody thinking that their safety deposit box is insured. Um, so that's something you'd probably want to be aware of. And um, it may be secure, but not necessarily have FDIC insurance. Sure. So if you have 20

Spreading CDs Across Banks For Safety

Ryan Nelson 10:20

grand and sitting in a safety deposit box, that may not be FDIC insured. Okay. Um and then let's see. Yeah, so really, I mean, there's some ways around this, like you said, making sure you have there's ways to if you even with big dollar amounts, there's ways to make sure it's all insured. Right. Right? Just spreading it through different financial institutions or get changing the ownership category. And in no way is that uh unethical or shady or anything.

Aaron Hoisington 10:46

Right. That's what I was gonna ask, because like a lot of times when you're like, oh, to kind of get around this, that's kind of has a negative connotation, but it seems like that's just it's frankly kind of encouraged, like if you will. Like exactly. Yeah.

Ryan Nelson 10:59

And in a while back, gosh, I I don't even remember now, there was the banks in San Francisco that that failed. Um I can't think of the name of it. And I I want to say it was like two years ago now. Uh I could have my timeline off as well. Um, but there were this was a big topic in the news, and there were people who had more than $250,000 um in their bank accounts, and uh FDIC actually insured all of them for the entire amount. So they only had to step up and give, you know, if somebody had five million dollars in this bank, um, FDIC was only on basically on the hook to give them two, you know, if they had $500,000 in the bank, FDIC only had to step up and give them $250,000. Right. But in that situation, they made everybody whole. And to my recollection, I believe I heard something at that time. This would be worth confirming, that FDIC, that basically every bank failure ever, everybody's always been made whole.

Aaron Hoisington 11:52

I thought I saw that too. I re I'd have to confirm because it was like Silicon Valley Bank or something like that. That was the one that but um but yeah, I think they were there was something that they were preaching that like it's it's all there's never been like an instance where people

Similarities, Differences, And How To Verify

Aaron Hoisington 12:05

weren't made whole or a bank wasn't made whole. I can't remember the specifics of it, um, but I do remember I think it was 2023, 2020, I want to say, when that kind of um happened there. But yeah, I remember they were just like, oh, this happened, like we're gonna make everybody and it it was it was kind of an interesting thing. It was like all the rage for in the news for a minute, and they're just like gone.

Ryan Nelson 12:24

Yeah, it's like okay. And I and I just did a quick Google just to see if make sure I wasn't completely wrong. So it says um since the creation of the FDIC in 1933, no depositor has ever lost a penny of their FDIC insured funds um up to the standard insurance limit. So, however, for depositors that exceed the insurance limit, $250,000 per depositor, per bank, per ownership category that we talked about, right? Um, it's possible for a depositor bro depositor to not be fully made whole unless a special ex exception is invoked by the government. Okay. And I want to say that that has always happened, but either way, it wouldn't be I I've heard some people get a little nonchalant um and say, oh yeah, you know, I have $400,000 in this account, but you know, technically it's only $250,000 is covered, but um, but that's i they I they would still make me whole. It's like, well, probably, but you could take a risk there. Yeah, you could just move $150,000 to a different bank and know you're good. Exactly.

Aaron Hoisington 13:22

Yeah, just be able to sleep a little more soundly. Exactly.

Ryan Nelson 13:27

Um yeah, hopefully that uh hopefully that gives uh a little bit more clarity to these insurance types.

Aaron Hoisington 13:33

Absolutely. No, I think it definitely does there, my man, for sure. I think that that's uh a good way of painting that picture and and thinking about like, you know, if you were honestly if you if you have that situation where you potentially have $250,000 or more to put in, like it's a good it's one of those problems I'm like, ah, that'd be a good problem to have. Like, how do I how do I make sure all my money's insured? That that'd be that'd be a uh oh man, I'm I'm hitting the limit at this bank. Awesome. Like, how do we get

Common Mistakes And Misconceptions

Aaron Hoisington 14:00

into a different one or a different account or something too? So um ways around it for sure, and uh could set you up pretty nicely as well. So um awesome, Ryan. We'll appreciate it. We'll go ahead and uh pause here real quickly and uh be back on the other side of this. Everybody uh hang tight.

SPEAKER_00 14:14

And now to put the personal in personal finance.

Aaron Hoisington 14:21

Welcome back, everybody, this side of the physical physical podcast. We are uh still here, Aaron and Ryan, and uh we're gonna do a little trivia question for you guys. Haven't done one of these in a minute. So um, Ryan, I'm excited to see uh if you uh continue to uh to wow me. Um yeah, my luck's come to an end. I'm sure. Also, the my bar is relatively low. So we'll we'll see how it goes. But uh um all right, so we're gonna do it's a two-part question, kind of on a similar thing. First one is uh I think you'll do pretty well on this one, but uh um what are the five largest states in the United States by area? So by square miles, if you will, or just the the largest ones that are out there, top five.

Ryan Nelson 15:05

Um Alaska, Texas, uh Alaska, Texas, California. Those are the top three right there. Bang. Um two more.

Aaron Hoisington 15:17

These are where it always gets interesting. I was like, think about the shape of like a map, and I'm like, what takes up most of the space on those? I'll I'll give you it. They are on like they're they're uh west of the Mississippi River. Oh, if that helps.

Ryan Nelson 15:34

Uh a little bit. Yeah. The only one that was east that I was considering was uh Florida, but I wasn't really sure how big that was. Yeah. Um okay, well then God, uh Nevada could be up there. I think it's between uh Wyoming, Nevada, and Montana would my guess would be it's two of those are the or three, two of those two of those three are the remaining ones. I'll say um Nevada and Wyoming.

Aaron Hoisington 15:59

Okay, so incorrect. Montana is number four. So you were right there with it. And this one actually got me because I was like, wait a minute. Uh it's New Mexico is number five. Like it has a ton of ton of land out there. And I'm like, oh sweet, but it's like pretty close. Nevada's seventh, I believe. So it's like right there. It's like Nevada and Colorado, and like these different ones are really close. So pretty good. Three out of five, not bad. Nailed the for top three, and you had the fourth one there, just didn't go with Montana. Now we're gonna pivot on what

Bank Failures, Limits, And Being Made Whole

Aaron Hoisington 16:30

are the most populated states in the United States. So the ones that have the most people who live in those states. Um Nevada, uh Rhode Island, most populated states.

Ryan Nelson 16:44

Most populated states there. There are some there are some overlap. So it's yeah, Texas, Florida, and um and California are the top three. Yeah. Yeah. Excellent. Um God, it could be New York. Um let me think.

Aaron Hoisington 17:02

Because it's all a sense because you think about I'll give you a hint, it's not Montana. Yeah, these these different ones that like you're like, oh wow, the it's got a lot of space going there, but not a lot of people actually live in Alaska. Right, yeah. God, New York's so small, but it's so dense. I'm gonna say New York. Okay, that is number four.

Ryan Nelson 17:18

Okay.

Aaron Hoisington 17:19

And then oh God, it's it another in the north northeast. Yeah, it's in it's uh I'll say it's east of the Mississippi. Um it's in a similar kind of area up there, which I honestly always Is it Pennsylvania? It is, yeah, dude. Nice, excellent job. That's what well, I almost forget about that one. Like as far as like but you think like Philadelphia is huge, like you know, you got like Pittsburgh on the other side, you got Harrisburg, which is the capital. It's got like three or four big cities in there as well, too. So I was always like uh I and it's I always think about like when they do like the uh every four years the electoral college, like for like the election of like, oh, this one has like you know three votes, and then it's like this one has sixty. Oh, okay, like that's clearly got a lot more people in it there. So um pretty good, man. You got eight out of ten. So eighty percent. Yeah, not bad at all. So I'm I'm curious if uh the listeners out there, I want someone to text me and say, hey, I got I got all 10 out of those and I know exactly what's going on with them. But um I think that uh state state trivia, like that's always kind of fun because you're like, huh, like how big is this state in comparison to like population is always like really unique to me.

Ryan Nelson 18:35

Uh somebody out there will know them all.

Aaron Hoisington 18:36

Oh, I'm sure somebody will out there. Um hopefully, uh hopefully one of our one of our really smart friends will will know it. So yeah. Um awesome. Well, appreciate it, Ryan. As always, we'll go ahead and uh wrap this one up. But uh before we uh before we depart, I'll uh leave you with the final words. As always, stay the course.

SPEAKER_00 18:54

Thank you for joining us for the Fiscal Physical Podcast. Until next time, happy listening. And as always, stay the course. If you have a question or topic suggestions, please email us at podcast at alchemywealth.com. If you enjoyed today's discussion, subscribe to the podcast to ensure you never miss an episode. And consider leaving us a rating and review on your favorite platform. This helps other

Quick Break And Transition

SPEAKER_00 19:20

listeners like you find this job. For more resources, you can visit Alchemy Wealth Management's website at www.alchemywealth.com or find your physical physical book on Amazon. We'd be remiss if we didn't mention the personal finances just then. First of all, please don't take anything we say as advice. The print editing content is for informational and entertainment purposes only. It's not an offer or a solicitation, nor should it be construed or relied upon for tax, legal, or investment advice. It doesn't consider your personal financial situation or objectives and may not be suitable for you.

unknown 20:00

Mm-hmm.