Credit union card rewards gap limits top-of-wallet gains, PYMNTS says
PYMNTS Intelligence says credit unions win trust and recurring bills but trail national banks on discretionary card spending.
By Rafael Ortiz · Fintech Correspondent
· 3 min read
Credit union card rewards are emerging as a central weakness in the industry’s effort to convert member trust into daily card use, according to PYMNTS Intelligence. The research found that credit unions convert 48% of consumer cardholders into top-of-wallet users, compared with 69% for national banks, despite stronger member satisfaction and primary-bank relationships.
PYMNTS Intelligence said 61% of consumer members identify their credit union as their primary financial institution, ahead of the 45% of consumers who say the same of digital banks and FinTechs. Among small and mid-sized business members, the share treating a credit union as their primary institution rose to 54% in 2026 from 50% in 2024, according to the research.
The findings point to a split between relationship ownership and transaction ownership. Credit unions have retained a strong position in recurring payments, but they lose ground when consumers actively choose which card to use for travel, retail, dining and other discretionary categories.
What does top of wallet mean for credit union cards?
Top of wallet refers to the card a consumer uses first or most often when making purchases. For issuers, that status matters because it determines which institution captures transaction volume, interchange revenue and spending data that can be used to tailor offers and account features.
Member satisfaction remains a notable advantage for credit unions. PYMNTS Intelligence said 87% of consumers whose primary financial institution is a credit union report being very or extremely satisfied, while members who put a credit union card first show higher satisfaction than credit union cardholders whose preferred card comes from another institution, at 84% versus 80%.
JD Power’s 2026 U.S. Credit Union Satisfaction Study also found credit unions ahead of retail banks, with a score of 725 on a 1,000-point scale, 68 points above banks, though the credit union score fell four points from the prior year. JD Power attributed the advantage to low fees, personalized service and competitive interest rates.
Where credit union cards are winning and losing
PYMNTS Intelligence said credit union cards perform best in essential, recurring payment categories. For rent and mortgage payments, 23% of credit union cardholders use their credit union card, compared with 16% of national bank cardholders using a national bank card. Credit union cards also lead in utility bills, at 37% versus 34%, internet and mobile service, at 35% versus 33%, and basic healthcare, at 18% versus 16%.
The disadvantage appears in categories where the consumer makes a fresh card choice at checkout. PYMNTS Intelligence found credit union cardholders are 45% less likely than national bank cardholders to put their card first for travel purchases, at 11% versus 20%. The gap was 35% for electronics, at 11% versus 17%, 20% for retail, at 16% versus 20%, and 11% for restaurants, at 42% versus 47%.
Rewards appear to explain much of that shortfall. PYMNTS Intelligence said 44% of credit union cardholders cite rewards as a top reason for choosing their most-used card, while the share falls to 32% among those who already keep a credit union card at the top of wallet. That suggests existing credit union card loyalists may value service and convenience more than members who have not converted.
Other research cited by PYMNTS points in the same direction. Motley Fool reported that 64% of Americans rank card features, including rewards, interest rates and other benefits, above trust in the issuer when choosing a credit card. Mastercard found that 41% of consumers would move a secondary card to the top of wallet for better rewards and benefits.
PYMNTS Intelligence said credit unions with less than $10 billion in assets remain exempt from Durbin Amendment interchange fee limits, giving those institutions more room to fund competitive card programs. It also said small-business members who have not converted tend to favor budgeting and expense-management tools, while younger members look for rewards tied to their financial goals.
This story draws on original reporting from PYMNTS.com.
