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Financial Institutions Vs Credit Union Essay

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President Franklin D. Roosevelt signed the Federal Credit Union Act in 1934, allowing credit unions to operate. When you have an account with a traditional financial institution, you're considered an account holder/customer. When you have an account through a credit union, you become a member, which essentially makes you a partial owner of the organization. All members of a credit union are equal owners with equal voting privileges. Credit union's member eligibility is restricted to certain affiliated groups. For example, where the individual lives, works, attends school, or association by religious organizations. Under the Federal Credit Union Act, once you become a member of a credit union, you are a member for life even if you leave your affiliated group. If you don’t belong to an affiliated group you could still be eligible to join because most credit unions qualify an individual based on a family …show more content…

A financial institution is a for profit organization, while a credit union is not-for-profit. As not-for-profit organizations, credit unions pay no state or federal income taxes, an advantage that helps make possible to offer favorable interest rates and charge fewer and cheaper fees to members. Financial institution being for profit organization allows profits to be returned as earnings to their stockholders, receiving their income through the institution's customers. In order to serve the stockholders’ interest, financial institutions charge higher interest and fees in order to drive higher profits for the stockholder. Since the credit union isn't out to turn a profit, it can return its earnings to the members in the form of higher interest rates on savings products and lower interest rates on loans and credit cards. If a credit union should bring in more money than it requires operating the organization, it will distribute the overage in the form of dividends to its

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In order to understand the external environment of JPMorgan Chase, a PEST analysis can be conducted. PEST stands for political, economic, social, and technological. It is one of the most widely used strategic planning and management tools that businesses use to assess the impact of macro-economic factors on their industry and identify potential threats and opportunities. The political environment in which JPMorgan Chase Bank operates is highly regulated by the US government.

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