The news: Credit unions are falling behind national banks when it comes to credit card adoption, per a PYMNTS Intelligence and Velera report. 

• 48% of credit union cardholders prioritize using that card at checkout.
• By comparison, 69% of national bank cardholders make that card top of wallet.

Zooming out: Credit unions’ strong institutional trust is failing to convert into top of wallet card loyalty. Despite weak card use, 6 in 10 credit union members consider their credit union as their primary financial institution.

Lack of compelling rewards is a big part of why credit union members defect to national issuers: 44% of credit union cardholders cite rewards as their top reason for choosing a card. 

• Credit union cardholders are 45% less likely than national bank customers to use their card for travel (11% vs. 20%).
• Credit union cardholders are 11% less likely than national bank peers to use those cards at restaurants (42% vs. 47%).

But credit unions are capturing essential spend.

• 23% of credit union cardholders use their card for rent and mortgage payments, compared with 16% of national bank cardholders.
• Credit union cards capture utility bills 37% of the time versus 34% for banks.
• Credit unions also snagged utilities, groceries, and basic healthcare spending at higher rates.

This suggests that credit unions’ competitive advantage lies with their low interest rates for essential monthly bills. 

Recommendations for credit unions: National banks’ scale and extensive partnerships mean credit unions can’t compete as heavily in categories like travel and dining for card spend. 

However, increasing cash-back offers on categories like groceries and utilities could connect with members and attract new cardholders: 44% of consumer credit cardholders say cash-back offers are their top card-choice factor, per PYMNTS.

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