What is statement credit?

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In a Nutshell

If you’ve ever received cash back rewards on a credit card, they might come in the form of a statement credit. Instead of giving you rewards or money directly, credit card companies may offer to add the amount back to your account balance.
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A statement credit is one of the ways a credit card company might issue cash back or rewards you’ve earned.

In basic terms, a credit is the opposite of a payment — you get money credited back to your account instead of borrowing it to pay for a purchase.

Statement credits can show up on your monthly credit card statement, often in both a list of transactions and as a category of account activity.


How you might receive a statement credit

When you receive a statement credit, it could come in a few different forms. Here are some of the some common ways to get one.

Returns

When you return a previous purchase, whether online or in person, the money you get back will typically go to the credit or debit card you used for the original sale. When this happens, the returned amount will be added back to your card account balance as a statement credit.

Cash back rewards

Many credit cards offer cash back, with statement credit as one way to redeem your rewards. If you redeem this way, the redemption amount should post to your account as a statement credit that decreases your card balance.

But keep in mind that not every credit card offers the same ways to receive or redeem cash back. Some might let you pick from options including statement credits, checks and deposits into a bank account, and others might limit your options to just one method.

Travel rewards redemption

Credit card companies issue travel rewards in many forms, but one is by allowing redemption for previous purchases.

For example, Capital One offers redemption on past travel purchases via its Purchase Eraser feature. After you book your travel, you can use the Capital One app or website to redeem your available miles and get a statement credit for the cost of your travel purchase. 

Credit card perks

Sometimes simply using your card for specific purchases is enough to get a statement credit. Many rewards credit cards offer statement credits as reimbursements for advertised perks.

For instance, it’s common to see premium credit cards offer automatic travel credits or a credit for a Global Entry or TSA PreCheck application fee. In these cases, you simply make the relevant purchases with the credit card, and then the statement credit should appear on your account.

What happens when your account statement shows more credits than purchases?

If you receive more back in statement credits than you’ve made in purchases, then your account should show a negative balance. In that case, you don’t owe anything — in fact, the lender owes you money. When this happens, you can let the balance remain on your account to cover future purchases or request the money from your card servicer via check, depending on the lender’s policies.


Is statement credit always the best option?

Now that you know what a statement credit is and how you might earn one, it’s important to remember that it’s not always your only option for getting money back from a purchase or rewards program. Whether you choose to redeem via a cash back, travel rewards or perks program, consider the option that suits your lifestyle best.

If you’re having trouble finding a statement credit you think you’ve earned, consider contacting your card’s customer service line for a deeper explanation. Credit card companies often handle their systems differently, and it can be beneficial to find out how yours works.


About the author: Dori Zinn is a personal finance journalist based in Fort Lauderdale, Florida. She enjoys helping people find ways to better manage their money. Her work can be found on numerous websites… Read more.