Targeted Rewards Could Close Credit Unions’ 21-Point Wallet Gap

Credit unions (CUs) have spent decades building the kind of customer relationship that national banks would struggle to manufacture with even the biggest marketing budget.

But new PYMNTS intelligence in the most recent edition of the 2026 Credit Union Tracker® Series reveals that the customer relationship frequently breaks down at checkout. According to the report’s findings, 61% of credit union members consider their CU their primary financial institution, while 87% of consumers whose credit union is their primary FI report being very or extremely satisfied. Yet CUs convert just 48% of cardholders into top-of-wallet users versus 69% for national banks.

That 21-percentage-point gap exposes an important distinction in consumer banking: Owning the financial relationship is not the same as owning the transaction. And for credit unions, closing that gap could mean competing more aggressively on rewards.

Credit Unions Win the Bills. Banks Win the Spending.

The category-level data makes the challenge clearer. Credit union cards perform well when consumers don’t have to actively decide which card to use. Twenty-three percent of CU cardholders use their card for rent or mortgage payments, versus 16% of national bank cardholders. CUs also hold smaller advantages in utilities, internet and mobile services, and basic healthcare.

But the pattern reverses when consumers have to reach into their wallet and make a choice. For travel purchases, just 11% of CU cardholders primarily use their credit union card, compared with 20% of national bank cardholders. Credit unions also trail in electronics, retail and restaurants.

That distinction matters because recurring payments can overstate the strength of a card relationship. A consumer who attached a CU card to the electric bill two years ago may continue generating transactions without reconsidering the decision. A restaurant tab, plane ticket or new laptop creates a fresh competition every time.

Read the report: The Top-of-Wallet Challenge: Why Trust Alone Is Not Enough to Drive Card Usage

Among CU cardholders, 44% cite rewards as a top factor when deciding which card they use most. Interestingly, only 32% of consumers who already put their CU card at the top of their wallet say the same. The data reveals that rewards may matter most precisely where credit unions are weakest: converting members who like their institution but prefer somebody else’s card.

The strategic question, then, isn’t whether credit unions can outspend the largest issuers in a rewards arms race. For many institutions, that would be unrealistic. It’s whether rewards can be deployed more selectively.

Travel, dining and retail are natural battlegrounds because those are categories where consumers repeatedly choose among cards. Personalized cash back, merchant offers and category-specific incentives could therefore potentially move more spending than simply increasing rewards uniformly across an entire portfolio.

After all, the prize extends beyond interchange. The PYMNTS Intelligence found that members who put their CU card first also show stronger broader engagement. Between late 2024 and early 2026, the share reporting increased deposits rose 30% among top-of-wallet consumer members and 28% among top-of-wallet SMB members, faster than other member segments.