What Is A Statement Credit?

In the world of credit card rewards, statement credits are one of the most beloved perks. How great would it be to have a charge made on your credit card and know that at least a portion of it will be covered by your credit card issuer?

If you’re unfamiliar with the concept and want to understand how statement credits work, read on to find out everything you need to know, including which cards offer the best statement credit benefits.

What is a statement credit?

A statement credit is an amount that a credit card issuer, such as Discover or American Express, applies to your account. It is deducted from your card balance but doesn’t count toward your minimum payment. For example, if you buy something with your credit card and then return it for a refund, that refund will be issued as a statement credit. As another example, you may be able to redeem cash back or rewards for a statement credit to reduce your credit card balance.

Another way you can get a statement credit (and my favorite way) is if it’s a credit card reward. Some credit cards allow you to redeem cash back for credit, while some good credit cards will issue you a statement credit for certain categories of purchases.

For example, if I had a credit card (which I would have if it existed!) that gave me a $20 monthly credit towards bookstore purchases, I would go to the bookstore every month. In fact, I don’t think I could keep my bookstore spending below $20, so I would probably spend $30 each month. In that case, the credit card would apply the $20 to my card balance, and I would end up only paying $10.

How to Use Statement Credits

Typically, if a statement credit is part of your card’s benefits, there’s no extra step required to use it. You may have to sign up for the offer, like the dining credit offered by the American Express® Gold Card, but after that, the credit will automatically appear on your account when you make an eligible purchase.

If you want to redeem your rewards as statement credits, you’ll need to do so through your online account. However, while exchanging cash back for statement credits is a reasonable deal, exchanging points or miles for statement credits is usually not the best idea, as doing so can significantly reduce the value of your travel rewards.

For example, if you redeem Chase Ultimate Rewards points for statement credits, they’re worth 1 cent per point. That’s more than many rewards programs offer for this type of exchange, but you can get even more with other exchange options. For example, Bankrate estimates that you can expect to earn 2.3 cents per point if you transfer your Chase Rewards to the World of Hyatt program. And, if you’re a Chase Sapphire Reserve® cardholder and you redeem points for travel through Chase Travel, your points will be worth 1.5 cents per point.^S.M. Portal.

Some credits will be posted immediately, while others may require a wait of days or weeks.

Credit cards that offer annual statement credits

Now, onto my favorite part: talking about cards with the most attractive annual statement credits.

Best Credit Cards with Annual Statement Credit

Chase Sapphire Reserve

When talking about credit cards with annual credits, it’s impossible not to mention the Chase Sapphire Reserve. Its $300 annual travel credit is legendary. This credit is automatically added to your account on each card anniversary and can be applied to a variety of purchases.

Eligible purchases include airline tickets, rental cars, hotel stays, cruises, discount travel sites (including Priceline, Expedia and Orbitz), public transportation (trains, buses, taxis, etc.), toll bridges, highways, parking lots, garages, timeshares and travel agencies.

As you can see, taking advantage of this perk is easy and already justifies more than half of the card’s $550 annual fee.

American Express Platinum Card

The Platinum Card from American Express is another very popular travel credit card: It has an annual fee of $695 but offers a variety of statement credits worth more than $1,500 a year.

With this card, you can earn a variety of credits that will enhance your travel experience, dining and entertainment credits, fitness-related credits, etc. Overall, the Amex Platinum offers more in terms of statement credits compared to the Chase Sapphire Reserve, but these credits are also less flexible.

With the Chase Sapphire Reserve, you qualify for a generous credit on almost any type of travel purchase. This is not the case with the Amex Platinum, which only offers statement credits for certain types of purchases. Even with the airline credit, you can only choose one airline, and you have to fly that airline once a year, in January. This doesn’t give you much room to choose the best fares and options for your trip.

American Express Gold Card

As you can see, rewards credit cards primarily offer statement credits for travel purchases, but there are other options out there, like the American Express Gold Card, which is a foodie’s dream come true.

For a $250 annual fee, you get up to $120 in Uber Cash to spend on rides and meals ($10/month Uber Cash, expires at the end of the month) and up to $120 in dining credits ($10/month, registration required) to spend at participating restaurants or for delivery through Grubhub. That’s $240 a year to spend on delicious meals!

Gold members also receive up to $100 in credits on Hotel Collection (when booking two or more consecutive nights through the American Express Travel portal).

Conclusion

It’s always nice to see a credit on your credit card statement; it means you’ve earned a great perk. It doesn’t count toward your minimum payment, but it does lower your balance. If you get the right credit card, adding a statement credit to your list of perks can be great news for your budget.