Credit Unions Prove Spending Control Drives Top-of-Wallet Success

Credit unions (CUs) are proving their competitive strength in the evolving financial landscape, particularly in rural areas and among Gen Z consumers. With a remarkable 71% top-of-wallet conversion rate among small-town and rural small and medium-sized businesses (SMBs), CUs are emerging as serious contenders against national and digital-only banks. This report dives into what’s fueling their success — and where challenges remain.

While financial incentives remain the top reason consumers and businesses choose a primary payment card, many CU cardholders prioritize spending control tools over cash back or lower interest rates. With 20% of CU users citing these features as a key decision-making factor — 25% more than national and digital-only bank users — it’s clear that financial management capabilities are a growing differentiator.

Yet despite these strengths, CUs may be leaving some opportunities on the table. High-income consumers and millennials are less likely to put their CU-issued cards at the top of their wallets, and rewards programs offered by national and digital-only banks continue to draw consumers away. So, how can CUs bridge the gap?

In “Credit Union Innovation Readiness Index: The Path to Top-of-Wallet Conversion,” a PYMNTS Intelligence and Velera collaboration, we surveyed 12,081 U.S. consumers and 2,000 U.S. SMBs to understand their card usage and the factors influencing their top-of-wallet card choices.

Inside the Playbook:

• Analyze how CUs achieve higher top-of-wallet conversion rates among SMBs and Gen Z than their competitors.
• Uncover the unique motivations behind CU cardholders’ choices, including the importance of spending control tools.
• Explore how consumers and SMBs use CU-issued cards most often for essential purchases, like groceries for consumers and operational costs for SMBs.
• Discover why high-income consumers and millennials are less likely to prioritize CU cards and what CUs can do to reverse this trend.
• Examine strategies that CUs can implement to enhance their rewards programs and better compete with national banks and digital-only players.

This report paints a clear picture: Credit unions have a unique opportunity to expand their influence by building on their strengths. Their high top-of-wallet conversion rates among Gen Z and rural SMBs prove consumers value more than just rewards — they appreciate financial control. However, to stay competitive, CUs must refine their offerings for high-income earners and millennials, who are more likely to be swayed by premium rewards and digital-first experiences.

By improving incentive programs, enhancing digital tools and refining their outreach strategies, CUs can elevate their position in the financial services industry. Dive into the full report to uncover actionable insights to drive top-of-wallet success for credit unions in 2025 and beyond.

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The “Credit Union Innovation Readiness Index: The Path to Top-of-Wallet Conversion,” a PYMNTS Intelligence and Velera (formerly PSCU/Co-op Solutions) collaboration, examines consumer and SMB CU card usage and the factors influencing their top-of-wallet card choices. The playbook is based on a census-balanced survey of 12,081 U.S. consumers conducted from Oct. 21, 2024, to Nov. 20, 2024. This study was complemented by a survey of 2,000 small to medium-sized businesses (SMBs), which was conducted from Oct. 23, 2024, to Nov. 20, 2024.

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