April/May 2025
Credit Union Tracker® Series

Going for Gold: Winning Top-of-Wallet Status for Credit Unions

Credit unions are securing greater top-of-wallet status with two distinct constituencies: SMBs and Gen Z consumers. CU success stems from personalized service and localized trust. However, CUs must address critical gaps in rewards and digital experience to compete with top national and digital banks across other segments.

01

CUs are earning top-of-wallet status with small-town businesses and younger consumers. It’s a sign that their influence is growing where they’ve long been strong — and where the future is headed.

02

CUs trail national and digital banks in wallet primacy among high-income users and millennials. To win the top spot in these consumers’ wallets, CUs will need to add important items to their card products — such as stronger rewards programs.

03

Roughly one in five CU cardholders — consumers and SMBs alike — say spending control and tracking tools drive their card choice. These features now rank just behind rewards in importance, signaling a clear path for credit unions to deepen retention.

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    Credit unions (CUs) are gaining momentum in the battle for top-of-wallet status. They’ve carved out an edge with small to mid-sized businesses (SMBs) in small towns and rural areas for their local focus. They’re also finding favor among younger consumers, with Generation Z prizing their personalized service. These developments suggest that community-oriented institutions can still prevail in a crowded payments landscape.

    Cracks remain, however. CUs lag national and digital-only banks when it comes to converting millennials and high-income consumers, who expect rich rewards and sleek digital experiences. Winning these segments means delivering more than familiarity — it means competing on features, incentives and innovation.

    Credit Unions Win Where It Counts

    CUs are earning top-of-wallet status with small-town businesses and younger consumers. It’s a sign that their influence is growing where they’ve long been strong — and where the future is headed.

    CUs achieve top-of-wallet status among rural SMBs and Gen Z.

    Credit unions excel among small businesses in small-town and rural markets, where 71% of SMBs place CU cards at the top of their wallets. Among Gen Z cardholders, 60% also favor CU cards — a sign that younger users are buying into the credit union value proposition. Together, these trends point to a widening CU footprint across both traditional and emerging segments.

    60%

    of Gen Z consumers place CU-issued cards at the top of their wallets.

    Looking across all regions, CUs achieve top-of-wallet status with 53% of SMB cardholders, compared to 42% for digital-only banks. Among microbusinesses — those generating less than $250,000 in annual revenue — CU cards are the top-of-wallet choice for 68%. These firms aren’t just looking for sleek interfaces — they’re seeking stability, trust and cards that support real-world cash flow demands. Credit unions deliver on those needs, while FinTechs remain optimized for scale, not necessarily nuance.

    Loyal SMBs find more value in local banking relationships.

    For rural and lower-revenue SMBs, local access and personalized service often outweigh scale. Forty-nine percent of rural SMBs choose a credit union or community bank, compared to just 25% that opt for a national provider. Among lower-revenue businesses, 32% choose local banks and CUs, drawn by nearby branches, lower fees and tailored perks. Satisfaction follows: SMBs served by smaller financial institutions (FIs) rate 12 features highly, compared to 11 for national bank users. But loyalty drives the biggest gains — SMBs with strong FI loyalty report high satisfaction with 15 features, while less loyal peers rate just six. Relationship depth, not just product breadth, sets the tone.

    Rewards Weakness Limits Wallet Reach

    CUs trail national and digital banks in wallet primacy among high-income users and millennials. To win the top spot in these consumers’ wallets, CUs will need to add important items to their card products — such as stronger rewards programs.

    CU rewards fall short with higher-income and millennial cardholders.

    39%

    of CU cardholders cite rewards as the reason they prefer CU cards over all others.

    CUs hold a 53% top-of-wallet share among consumers overall but underperform with high-income consumers and millennials, per PYMNTS Intelligence. Just 48% of consumers earning more than $100,000 annually place CU cards first, compared to 64% of low-income cardholders. With 53% of national bank users citing rewards as their primary motivation, versus just 39% for CU users, the rewards gap remains a key obstacle to broader CU adoption.

    Consumers overwhelmingly value rewards — and expect to keep them.

    According to a newly published survey, 91% of consumers value their credit card rewards, and 80% have at least one rewards card. Roughly two-thirds (63%) would be disappointed to lose those perks due to policy changes. For credit unions, closing the rewards gap isn’t optional — it’s table stakes for remaining competitive.

    Navy Federal’s secured card adds rewards to credit-building.

    Navy Federal Credit Union has launched a secured credit card that pairs 1% cash back with credit-building tools, targeting consumers early in their financial journey. The new cashRewards Secured card complements Navy Federal’s broader rewards portfolio, which includes 1.5% cash back on its standard cashRewards card. The move shows how some CUs are competing by combining entry-level credit access with incentives that have traditionally attracted cardholders to national issuers and digital banks.

    Spending Tools Build Loyalty That Lasts

    Roughly 1 in 5 CU cardholders — consumers and SMBs alike — say spending control and tracking tools drive their card choice. These features now rank just behind rewards in importance, signaling a clear path for credit unions to deepen retention.

    Spending controls rank just behind rewards in CU cardholder priorities.

    Twenty percent of consumer CU cardholders and 21% of SMB CU cardholders cite control features — like real-time transaction alerts and mobile card management apps — as key to card choice. Among consumers, these preferences stand out in contrast to other FIs: Just 16% of national bank users and 19% of digital-only bank users cite similar priorities. For SMBs, aesthetic considerations also play a notable role in shaping cardholder preferences. One in 10 CU SMBs cite card design and materials — such as metal or sustainable plastic — as a main driver in their cards being their top payment choice, compared to just 4.8% of national bank SMBs.

    20%

    of consumer CU cardholders cite spending control features as the reason their card is top of wallet.

    Credit unions can align card offerings with SMBs’ cash flow needs.

    SMBs turn to credit cards for stability. Seventy-two percent say credit cards offer better features than other payment methods, while 61% say cards improve cash flow — with nearly one-third naming it the top benefit. In fact, card-using SMBs were 17% more likely than credit card non-users to report having no cash flow issues at all. These findings suggest CUs can build loyalty by positioning their cards not only as payment tools but also as financial buffers — supported by rewards, flexibility and access aligned to real business cycles.

    The Next Move for Credit Unions

    Credit unions have a clear path to expand their top-of-wallet success. Gen Z and SMB loyalty show that personalization and trust still win. However, to grow their share among high-income and millennial users, CUs must strengthen rewards and digital tools.

    PYMNTS Intelligence recommends a focus on three priorities:

    • Close the rewards gap. With 91% of consumers valuing card rewards, CUs must match or exceed national offers to stay competitive.
    • Double down on spending controls. One in five CU users cites these tools as their top reason for card use. Features like customization and transparency contribute to stickiness.
    • Support SMB cash flow. With 61% of SMB card users citing cash flow gains, this use case remains central to CU card value.

    Credit unions that invest in rewards, innovation and control-focused experiences can gain and retain more cardholders without sacrificing the personal touch that sets them apart.

    Cody Banks

    To stay competitive in an evolving payments landscape, credit unions must lean into what drives both value and loyalty for their members. That means enhancing the overall card experience with richer incentives, intuitive tools that empower members to manage spending, and tailored solutions that help small businesses navigate everyday financial challenges. By focusing on innovation that complements their hallmark personal service, credit unions can grow their card portfolios, deepen relationships and secure top-of-wallet status.”

    Cody Banks
    Senior Vice President, Product Experience & Enablement, Velera

    About

    Velera, formerly PSCU/Co-op Solutions, is the nation’s premier payments credit union service organization (CUSO) and an integrated financial technology solutions provider. With over four decades of industry experience and a commitment to service excellence and innovation, the company serves more than 4,000 financial institutions throughout North America, operating with velocity to help its clients keep pace with the rapid momentum of change and fuel growth in the new era of financial services. Velera leverages its expertise and resources on behalf of credit unions and their members, offering an end-to-end product portfolio that includes payment processing, fraud and risk management, data and analytics, digital banking, instant payments, strategic consulting, collections, ATM and POS networks, shared branching and 24/7/365 member support via its contact centers. For more information, visit velera.com.

    PYMNTS INTELLIGENCE

    PYMNTS Intelligence is a leading global data and analytics platform that uses proprietary data and methods to provide actionable insights on what’s now and what’s next in payments, commerce and the digital economy. Its team of data scientists include leading economists, econometricians, survey experts, financial analysts and marketing scientists with deep experience in the application of data to the issues that define the future of the digital transformation of the global economy. This multilingual team has conducted original data collection and analysis in more than three dozen global markets for some of the world’s leading publicly traded and privately held firms.

    The PYMNTS Intelligence team that produced this Tracker:
    John Gaffney, Chief Content Officer
    Adam Putz, PhD, Senior Writer
    Alexandra Redmond, Senior Content Editor and Writer
    Joe Ehrbar, Content Editor
    Augusto Solari, Senior Research Analyst

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