Making Cents Blog

Share Insurance: What the new changes mean to you

Effective June 24, 2011, the NCUA is adding additional share insurance coverage to noninterest-bearing accounts such as Free Checking through December 31, 2012. This new coverage is separate from, and in addition to the regular NCUA share insurance rules.
Here is the official NCUA statement:
All funds in a ‘‘noninterest-bearing transaction account’’ are insured in full by the National Credit Union Administration through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to members under the NCUA’s general share insurance rules.
The term ‘‘noninterest-bearing transaction account’’ includes a traditional share draft account (or demand deposit account) on which the insured credit union pays no interest or dividend. It does not include any transaction account that may earn interest or dividends, a negotiable order of withdrawal (‘‘NOW’’) account, money market deposit account, and Interest on Lawyers Trust Account (‘‘IOLTA’’), even if share drafts may be drawn on the account.
For more information about temporary NCUA insurance coverage of transaction accounts, visit
 So how does that relate to you? Here’s an example to clarify:
If John has a $225,000 share certificate and a Free Checking account with a balance of $300,000, without any joint account holders, he would be fully insured for $525,000 (plus dividends accrued on the share certificate), assuming he has no other accounts at Alliance.
First, coverage of $225,000 (plus accrued dividends) would be provided by the share certificate as a single ownership account up to the Standard Maximum Share Insurance Amount (SMSIA) of $250,000.
Second, full coverage of the $300,000 Free Checking account would be provided separately, despite the checking account also being held as a single ownership account, because the account qualifies for unlimited separate coverage as a noninterest-bearing transaction account.
This is great news for you! At Alliance the following accounts now qualify for the temporary unlimited share insurance through December 31, 2012: Free Checking, Student Checking, Fresh Start Checking and Business Checking. We know all of this “legal jargon” can be confusing, so if you have any questions don’t hesitate to give us a call at 800.232.8669.

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