Statement credits – money back you earn for certain purchases – can make cards with higher annual fees a smart choice. It depends on your spending habits and how often you travel.
Applying for a credit card with a high annual fee? That might not seem smart at first glance, especially when so many cards offer rewards programs or cash back bonuses without charging you a fee each year.But some cards offer statement credits that might not only pay for the annual fee in value but also earn you additional money over the yearly cost of owning your card. It all depends on how you use your credit cards and, usually, how often you travel, take Uber or Lyft rides or order from food delivery services.
What are statement credits and how can their financial benefits outweigh the negatives of an annual fee? Here’s a look at how statement credits work, why they’re so beneficial and which cards offer the most generous credits.
What are statement credits?
Think of a statement credit as the opposite of a charge: Instead of a purchase you pay back, a statement credit reduces your credit card balance.
For example, many credit cards offer statement credits when cardholders pay for Global Entry or TSA PreCheck. Both of these services can make getting to your flight easier: Global Entry makes it easier to get back into the U.S. after you’ve traveled internationally. TSA PreCheck helps travelers get through airport security lines faster.
Neither service is free, though. Global Entry costs $100 for a five-year membership, while TSA PreCheck costs $85 for the same five-year period. However, many credit cards will give you a statement credit of up to $100 every four or five years when you pay for Global Entry or TSA PreCheck. Once you pay for this service, your card issuer will add a statement credit for what you spend on your account.
When you purchase something with your card that is eligible for a statement credit, the credit will be added to your account and essentially erase that eligible amount from what you owe. Say you owe $500 on your card, including $100 that you paid for Global Entry. Your balance will be reduced by $100 once your Global Entry statement credit is applied, and you’ll only owe $400 to pay off your credit card bill.
Those aren’t the only statement credits you can earn with credit card purchases, either. Some cards provide annual travel credits of up to $300. This means you’ll receive a credit on everything from hotel stays and flights to Uber and Lyft rides until you reach your card’s statement credit limit (check your credit card’s terms to see what exactly is included in your card’s statement credit offer). Other cards offer statement credits when ordering food delivery services, such as DoorDash or Uber Eats.
Depending on how you spend, you could earn enough statement credits to easily pay your annual fee each year. Say your annual fee is $250. If you earn $300 in travel credits and another $100 credit on Uber rides, you’ve already more than covered your annual fee before you’ve even enjoyed the other rewards and perks of the card.
Which annual fee cards pay for themselves with statement credits?
Credit card issuers have gotten creative with statement credits. Depending on your spending habits, you might earn enough in statement credits to easily pay for your annual fee.
Here’s a look at credit cards that offer the most generous statement credits.
The Platinum Card® from American Express
Annual fee: $695
Credits: The Platinum Card from American Express offers many valuable credits to cardholders. If you join an Equinox gym, you can earn a credit of up to $300 a year when you sign up for a club membership. You’ll also get $200 back in statement credits each year on prepaid bookings through American Express’s Fine Hotels + Resorts or The Hotel Collection.
The Platinum Card provides up to $20 in statement credits each month, or $240 a year, on select streaming and other digital entertainment services (such as Peacock and Audible). You’ll also get a $179 credit each year if you sign up for a Clear membership. Clear uses biometrics to assign members a touchless ID, which allows you to move faster through security checkpoints at airports and stadiums across the country.
If you fly often, you’ll benefit from the Platinum Card’s up to $200 airline fee credit that helps cover incidental fees charged by a qualifying airline that you choose at the beginning of each year. You’ll also get up to $100 in statement credits a year for purchases at Saks Fifth Avenue or saks.com.
Finally, Platinum Card members get $15 in Uber Cash each month for orders through Uber Eats or rides with Uber, plus an additional $20 bonus in December. That adds up to a possible maximum of $200 in annual Uber savings.
If you take advantage of all these perks each year, you’ll earn $1,419 in statement credits. That easily covers the Platinum Card’s $695 annual fee.
Welcome offer: The Platinum Card offers 100,000 rewards points for cardholders who spend $6,000 in purchases during the first six months of opening their accounts. Also, during the first six months of membership, cardholders will earn 10 points for every dollar they spend at restaurants worldwide and when they make purchases at U.S. small businesses that are part of American Express’s Shop Small program (on up to $25,000 in combined purchases).
Rewards: You’ll earn 5 rewards points for every dollar you spend on flights and prepaid hotels. You’ll earn 1 point for every dollar you charge on all other purchases.
American Express® Gold Card
Annual fee: $250
Credits: Depending on your spending habits, you can earn plenty of statement credits with the American Express Gold Card.
Start with eating out or ride-sharing: You can earn up to $120 in Uber Cash each year by adding your Gold Card to your Uber account. You’ll then automatically receive $10 in Uber Cash each month that you can spend on Uber Eats orders or Uber rides in the United States.
You can take advantage of an additional up to $120 each year with the Gold Card’s dining credit. You’ll receive up to $10 in statement credits each month when you pay with the Gold Card at participating restaurant partners.
The Gold Card is valuable, too, if you frequently stay at hotels. The card offers a $100 yearly hotel credit that you can spend on hotels in The Hotel Collection. You can spend this credit on dining, spa and resort activities. It will also qualify you for a room upgrade when you book a stay of at least two consecutive nights with American Express Travel.
Add all that up, and you can qualify for $340 in statement credits each year, giving you a value higher than the Gold Card’s $250 annual fee.
Welcome offer: You’ll earn 60,000 Membership Rewards points if you spend at least $4,000 in purchases on your new card during the first six months of opening your account.
Rewards: You’ll earn 4 points for every dollar you spend at restaurants, including eligible takeout and delivery. You’ll also earn 4 points for every dollar you charge at U.S. supermarkets on up to $25,000 worth of purchases each calendar year (then 1X points). Purchases for flights booked directly with airlines or on amextravel.com earn 3 rewards points for every dollar spent. You’ll earn 1 point for all other purchases.
Bank of America® Premium Rewards® credit card
Annual fee: $95
Credits: Because of its lower annual fee, you won’t need to earn many credits to pay for the yearly cost of owning the Bank of America Premium Rewards credit card.
You can cover the value of your whole fee, with extra to spare, with the card’s $200 travel statement credit. Each year, you can spend up to $100 in airline incidental fees and up to $100 on Global Entry and TSA PreCheck. Bank of America will then refund this combined $200 in the form of a statement credit.
Welcome offer: If you make at least $3,000 in purchases during the first 90 days of opening your account, you’ll earn 50,000 bonus rewards points.
Rewards: Earn 2 points for every dollar you charge on travel and dining purchases. Through Dec. 31, 2021, you’ll also earn 2 points for every dollar you charge at grocery stores. You’ll earn 1.5 points for every other dollar you charge.
Chase Sapphire Reserve
Annual fee: $550
Credits: The Chase Sapphire Reserve comes with a hefty annual fee, but it also delivers valuable perks, including statement credit opportunities.
The Sapphire Reserve card offers a $300 annual travel credit for any travel-related purchases you charge to your account during the year. Through Dec. 31, 2021, gas station and grocery store purchases count for this credit.
Also, throughout 2021, the Chase Sapphire Reserve card offers $60 in statement credits on DoorDash purchases. And if you’re a fitness buff, you can earn up to $120 back on a Peloton membership.
The card also provides a statement credit of up to $100 every four years for the application fees for Global Entry or TSA PreCheck.
Add these up, and you could get $580 in statement credits, outweighing your annual fee.
And though it’s technically not a credit, the Sapphire Reserve also comes with a year’s free membership to Lyft Pink. This membership provides you with 15% off on car rides through Lyft. Chase says that the one-year membership has a minimum value of $199.
Welcome offer: When you spend $4,000 on purchases in the first three months of opening your account, you’ll receive 60,000 bonus rewards points.
Rewards: You’ll earn 3 points for every dollar you charge at restaurants, including for eligible delivery services, take out and dining out. You’ll also earn 3 points for every dollar you charge on travel expenses immediately after the first $300 you spend annually on travel purchases. Through March 2022, you’ll also earn 10 points for every dollar you charge on Lyft rides.
All other purchases will earn you 1 point for every dollar charged. Plus, as an added perk, your points are worth 50% more when you redeem them for travel.
You might balk at applying for a credit card with a high annual fee. But these cards come with generous rewards programs and valuable perks. Depending on your spending habits, you might earn enough statement credits to cover even the highest annual fees on the market.
If you travel often, or if you’re ordering Uber or Lyft rides multiple times a week, consider an annual fee card that offers statement credits. You might find that these credits can significantly ease the bite of those annual fees.