NCUA Insurance Coverage

Section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA) included a temporary provision for unlimited federal share insurance coverage on all amounts held in noninterest-bearing transaction accounts in federally insured credit unions. This coverage expired on December 31, 2012.

Generally, the DFA defines noninterest-bearing transaction accounts to include traditional, noninterest-bearing demand deposit accounts—such as share draft accounts—that allow for unlimited deposits and withdrawals at any time. This does not include NOW accounts, money-market accounts, or interest on lawyers trust accounts (IOLTA). This provision, among others, in the DFA was intended to ensure liquidity and enhance confidence in the banking system during the recent economic crisis.

Effective January 1, 2013, NCUA will no longer insure noninterest-bearing transaction accounts separately from other accounts or in excess of the standard $250,000 share insurance amount. In other words, noninterest-bearing transaction accounts will be subject to the same insurance coverage levels as all other share accounts in a credit union.