Though rare, financial institutions do fail from time to time. In 2023, for example, banking giants Citizens Bank, Signature Bank, and Silicon Valley Bank all collapsed.
But what about credit unions? Though they’re often considered “safer” than banks, credit unions can also fail — though the financial fallout is typically mild by comparison.
So far, in 2026, five banks have failed. In the same time period, three credit unions have failed. Let’s take a closer look at why a credit union might fail, and what happens next.
Read more: 7 credit unions anyone can join
Can credit unions fail?
It’s uncommon for credit unions to fail, but it does happen.
There are currently about 4,250 federally insured credit unions in the U.S. Since 2023, nine of them have failed.
According to the National Credit Union Administration (NCUA), the most common causes of recent credit union failures were ineffective management or lack of oversight and fraud.
As a credit union member who’s concerned with potential failure, there are more outward warning signs you can look for, including a combination of the following:
You can also check to see if the NCUA has taken enforcement actions against your credit union or sent them any alert letters.
Failed credit unions (since 2020)
What happens if a credit union fails?
If the credit union fails, a few different things can happen. Failed credit unions can merge with other financial institutions or be sold to other credit unions that take over management of your accounts, including deposits and loans. Or the NCUA will close the credit union and ensure you get your insured deposits back.
What happens to your deposits?
If your credit union closes and you have NCUA-insured accounts with them, you’ll receive a check for your covered deposits — including the principal and interest. Usually, you’ll receive your funds within five days of the credit union’s closure. NCUA insurance typically covers the following:
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Individual accounts up to $250,000 each
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Joint accounts up to $500,000 combined ($250,000 per account owner)
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Formal or informal revocable trusts up to $250,000 per beneficiary for each owner
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IRAs up to $250,000 combined
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Keogh accounts up to $250,000 combined
To get a better idea of which of your deposits are covered, you can use the NCUA’s Share Insurance Estimator.
What happens to loans and credit cards?
Even if your credit union closes, you still have to pay back your debt. Until you receive written instructions from the NCUA or the acquiring credit union, you’ll need to continue sending payments just as you did before the closure. If you fail to pay, the NCUA might deduct the debt balance you owe from the balance in your deposit account(s).
Are credit unions safer than banks?
While banks and credit unions offer similar federal protections for your money, credit unions are generally safer than banks.
One reason is that they’re far less likely than banks — particularly large banks — to experience bank runs. Since a much larger portion of credit union deposits are insured, customers are less likely to panic and withdraw cash en masse.
Uninsured deposits are such a big factor in bank runs that they’re considered one of the main drivers for the Silicon Valley Bank and Signature Bank failures in 2023. While just 10% and 5% of the two failed banks’ deposits were insured, respectively, 92% of credit union deposits were insured.
Small banks can also be a risk because they’re more heavily invested in an asset that’s been losing value: commercial real estate (CRE). CRE loans made up around 29% of small banks’ assets in 2023, and according to a report from the Office of Financial Research, about 278 banks were vulnerable as a result. At present, several large banks have 10% or more of their assets invested in CRE, including Flagstar Bank, M&T Bank, Citizens Bank, Valley National Bank,First Citizens Bank, Santander Bank, and more.