Credit Union Deposit Growth Smacks into Bank Card Habit

On July 9, 2026, PYMNTS put a hard number on the credit union deposit growth problem: members like their credit unions, but they still reach for national bank cards far more often at checkout. That gap matters because top-of-wallet behavior is now tied directly to deposit expansion, according to PYMNTS.

The thesis is blunt. Credit unions don’t have a trust problem. They have a conversion problem. Satisfaction is already high. The missed opportunity is turning that relationship into more deposits, more card usage and more daily financial activity that stays inside the institution instead of leaking to national banks.

July 9 data shows trust is already won, but wallet position is not

The PYMNTS piece cites two figures that should make credit union executives both confident and uncomfortable: 61% of members consider their credit union their primary financial institution, and 87% are very or extremely satisfied.

That is the good news. The bad news is where the payment behavior lands.

Credit union cards win at checkout 48% of the time, versus 69% for national banks. That difference is not cosmetic. Each missed swipe sends engagement, transaction data and interchange income somewhere else.

“Top of Wallet, Top of Mind: How Credit Unions Grow Deposits Through Conversion”

That title captures the whole tension. Members may feel loyal to a credit union, but loyalty does not automatically decide which card gets pulled out, which account gets funded or which institution captures the next layer of activity.

For XOOMAR readers tracking the wider pressure around bank-like relationships, this sits near our coverage of Klarna Bank USA Bid Pulls Fintech Banking Into the Fire and Klarna Bank USA Bid Pulls BNPL Giant Into Banking Test. The common thread is simple: financial relationships are being fought at the point of behavior, not just at the point of brand preference.

February surveys tie top-of-wallet conversion to credit union deposit growth

PYMNTS frames the underlying playbook around February survey findings, though the supplied source material does not specify sample sizes, field dates or report collaborators.

The strongest finding is not just that converted members spend differently. They deposit differently.

PYMNTS says no other segment came close.

That makes top-of-wallet conversion more than a card-program metric. It is a signal of deeper account usage. XOOMAR analysis: if a member chooses the credit union card first, the institution is not merely winning a payment moment. It is seeing evidence that the member’s financial center of gravity may be moving closer.

That is why credit union deposit growth should not be treated as a rate campaign alone. The source material points to a behavior loop: card preference and deposit growth move together among converted members. The report does not prove every causal step, but it does show a strong operational target.

The February card-choice gap is concentrated in discretionary spend

PYMNTS says credit unions already win automated bills such as rent, utilities and internet. The weak spot is discretionary spend, where rewards often decide which card gets used.

That distinction matters. Automated bills are sticky once set. Discretionary purchases are contested every time. The card at the top of the wallet has to keep earning that spot.

The reported rewards data is direct:

• Cash back: The top card-choice factor for 44% of credit union cardholders.
• Converted cardholders: Only 32% cite cash back as the top factor.

PYMNTS reads that as a signal from members who have not yet converted. They are telling credit unions what would move them.

The economics may be more favorable for smaller institutions. PYMNTS notes that credit unions under the Durbin exemption, meaning those with less than $10 billion in assets, keep more interchange per transaction than national banks do. That can help fund more competitive rewards without giving up the whole margin.

For SMB members, PYMNTS says the better lever is different: purpose-built business cards with expense tracking and higher limits, rather than consumer cards repackaged for business use.

Direct deposit is not measured here, but account primacy is still the real prize

The supplied PYMNTS material does not provide direct-deposit data. That is an important boundary. It discusses top-of-wallet conversion, card usage, automated bills, discretionary spend, deposits and SMB card needs.

Still, the strategic implication is clear enough. If a credit union wants more durable deposit growth, it needs to push beyond satisfaction and into active account primacy. That means the member must have practical reasons to use the credit union account and card first.

XOOMAR analysis: direct deposit, recurring payments and card credentials are likely to be the operational battleground for many institutions, but the evidence in this report points most clearly to card preference and recurring bill capture. Credit unions should be careful not to assume goodwill will handle the rest.

The conversion barrier is not just emotional. A satisfied member can still keep old habits because moving financial activity takes effort. If the current card already works, if rewards are better elsewhere, or if the member has no immediate reason to shift discretionary spend, satisfaction sits idle.

That is the danger. A warm relationship can still be under-monetized.

Executives, members and SMBs are reading the same problem differently

For members, conversion has to feel worth the bother. Trust helps, but rewards, convenience and clarity determine the next action.

For credit union executives, the PYMNTS figures turn card strategy into deposit strategy. The key metric is not whether members say they are satisfied. It is whether that satisfaction shows up in deposits and payment behavior.

For SMBs, the data points toward a more specific product gap. PYMNTS says SMB convertors report higher deposit activity at 41%, and SMB converters grew deposits 28% since 2024. But the recommended tool is not a generic rewards pitch. It is a business card built for business use.

For technology partners, the opportunity is narrower than a vague digital upgrade. The report points to measurable conversion moments: winning discretionary spend, strengthening rewards, supporting automated bill capture and giving SMBs card features that match how they operate.

The next decision point is whether credit unions treat conversion as an operating metric

The strongest credit unions in the next cycle will not be the ones that merely point to high satisfaction scores. They will be the ones that measure how often satisfaction becomes activity.

That means tracking top-of-wallet share, deposit growth among converted members, SMB card adoption and the specific places where national banks still win the swipe. If rewards are the issue, the response should be tested against card usage and deposit movement. If SMB cards are the issue, the proof should show up in conversion and balances, not just product launches.

The thesis would strengthen if future PYMNTS or credit union data shows that rewards changes, SMB card redesigns or bill-payment capture narrow the 48% versus 69% card-use gap while deposits keep rising among converted members. It would weaken if higher card incentives fail to move discretionary spend, or if deposit gains among convertors fade after the first wave.

The relationship is already warm. The next fight is whether credit unions can turn that warmth into default behavior before the next payment, card choice or deposit lands somewhere else.

Disclaimer: This XOOMAR analysis is for informational and educational purposes only. It is not financial, investment, legal, tax, or professional advice. It does not provide buy, sell, hold, price-target, portfolio, or personalized recommendations. Verify information independently and consult qualified professionals before making decisions.

The Bottom Line

• Credit unions already have member trust, with 61% calling them their primary financial institution.
• High satisfaction is not translating into daily payment behavior, where national bank cards still lead 69% to 48%.
• Each missed card use can mean lost deposits, transaction data and interchange revenue for credit unions.