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What is a statement credit?

A statement credit is one of the easiest and most common ways to redeem credit card rewards. Here's what you need to know.

Summary

A statement credit is money credited to your account that is deducted from your card balance. You can get typically get one when you return purchased goods, file and win a chargeback, or sign up for rewards cards.

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Have you ever wondered what those green negative numbers on your credit card statement are? If you’re a credit cardholder, odds are you’ve run into them more than once. They’re statement credits, and they can show up for a number of reasons.

If you find statement credits confusing, you’re not alone. Many credit cardholders have questions about them. Here’s what you need to know about what statement credits are, how you get them and how to use them.

What is a statement credit?

A statement credit is like a refund you receive from a credit card company or a merchant. It’s money credited to your account that is deducted from your balance and therefore appears on your statement as a negative number. It essentially reduces the amount of money you owe.

In some ways, a statement credit is similar to paying a part of your credit card balance. The difference is that instead of you depositing your money, the credit card issuer or bank reduces your debt.

It’s important to note that, even though statement credits lower your balance since you’re not putting any money into your account, they don’t count toward your minimum payment. This means that, even if you “pay” most of your balance with a statement credit, you’ll still have to make at least the minimum payment on the outstanding balance every month.

How to earn statement credits

There are a few ways to get statement credits:

Returned items

Typical statement credits come from refunds for returned purchases. If you bought something with your credit card and then returned it, the merchant issues the refund in the form of a statement credit, which should appear on your statement within a few days of returning the item.

Credit card signup bonuses

Many credit card issuers offer statement credits as incentives for signing up for a new credit card. In some cases, these statement credits can be used only toward a specific purchase category like travel or dining, while you can use others to cover any purchase.

One example is the Blue Cash Preferred® Card from American Express, which gives you a $300 statement credit if you charge $3,000 or more within the first six months. That statement credit is then applied to the next $300 in purchases you charge to your card after receiving the bonus.

Credit card rewards

Many rewards credit cards will let you redeem your points, miles or cash back rewards as statement credits toward different purchases. Different rewards programs handle these redemptions differently. Here’s how some of the major rewards programs treat statement credits:

Rewards programCan you redeem rewards as a statement credit?Minimum redemptionRewards rate when redeemed as a credit
Discover cards Cashback BonusYesNone1:1
Bank of America Cash RewardsYesNone ($25 for automatic redemptions)1:1
American Express Membership RewardsYes$251:0.6
Chase Ultimate RewardsYes$201:1

Special credit card perks

Besides rewards for purchases, some high-end credit cards also offer valuable perks, including special recurring statement credits. For example, the United Explorer Card and Chase Sapphire Reserve card offer up to a $100 statement credit to cover the cost of a Global Entry or TSA PreCheck application.

Chargebacks

Chargebacks are disputes you can file when a merchant refuses to give you a refund even if the product or service doesn’t meet your expectations or you never received the product in the first place. People also file chargebacks when they notice a purchase they don’t recognize on their statement. If you’re successful in getting a chargeback approved, your credit card issuer will give you a statement credit for the amount of the disputed purchase.

How to use a statement credit

Using your statement credits depends on how you earn them. In most cases, you don’t really have to do anything – they’ll just show up on your credit card statement every month. This is the case when you return an item, for example, or make an eligible purchase with a credit card that offers cash back rewards as statement credits. This is also the case with most sign-up bonuses, especially those applicable to all purchases.

On the other hand, special cash back programs that partner with specific brands like Uber sometimes require you to enroll in the particular offer, but once you do, credits will usually be posted to your statement automatically.

Redeeming reward points for statement credits

The main instance in which you’ll need to take action to receive a statement credit is when redeeming rewards for points, miles or cash back. This is because if your rewards card offers them you need to choose that option. To redeem rewards for a statement credit, you usually have to log into your online credit card account, select an eligible purchase, and then choose to apply your rewards as a statement credit.

Bottom line

Statement credits are a great way to get money back from your credit card company for different purchases, charges and even disputes. You can expect them to show up on your statement, but there are a few cases in which you may need to take some extra steps, such as redeeming rewards points for statement credits.

Statement credits offer convenience in exchange for a lesser value per point or mile redeemed, however, making them a bad choice if you want to maximize your points’ value. In the case of special credit card perks and sign-up bonuses, however, statement credits are as valuable as having hard cash deposited in your account. All in all, statement credits are a great way to get some extra value out of your credit card.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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