Statement Credit: Back to the Basics

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Statement Credit

If you have ever used some form of rewards credit card, then it is likely that you have taken advantage of a statement credit. However, if you are new to the game of getting statement credit back from your card issuer, you have come to the right place.

For starters, it is essential to know what statement credit is. Now, in simple terms, credit is the polar opposite of a payment made with your credit card. With credit, instead of paying for something and borrowing money from a credit card issuer, you get given money back. When you earn statement credit, it can show up on your monthly credit card statement as a transaction. Instead of subtracting from your line of credit, it will add to it. The statement credit is comparable to a refund in that way. 

Let’s say you have an outstanding credit card balance of $200. You then have $10 in statement credit to redeem against your outstanding credit balance. You can then get your outstanding balance down to $180. The more statement credit you can save up, the less you have to pay on your credit card statement, which means more money to spend elsewhere. How about using your saved money to go on a vacation?

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Statement credit sounds like free money! How do I get it?

 There are a few ways for you to earn statement credit; some of them you may know about, while others may be new to you. Let’s take a look at how you can receive a statement credit amount.

Cash Back vs. Statement Credit

If your credit card is a cash back credit card, you need to consider whether you should redeem your points for actual cash or a statement credit. The advertising behind your card may suggest that straight-up cash is always better; you get the extra money in your pocket straight away. With statement credit, you have to wait until the end of the month for your savings to become apparent. The points, when redeemed as credit or cash, usually have the same value. A card that offers both is your best option, but if you have to choose one or the other, cash back may be a safer choice. 

With statement credit, you have to spend with your card to use it. Then if you decide to stop using your card, you will have built up a statement credit that you cannot redeem. With a cash back reward, you can claim your money at any point with any savings you could have made with credit, taken advantage of elsewhere. Alternatively, you can disregard both options if your credit card provider offers others. The best option for you is the one that provides you the most value for your points to maximize savings. Just because a card gets advertised as a cash back card, does not mean you have to use it for that purpose.

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Cash Back Rewards Credit Cards

You have many options for credit cards that offer cash back rewards. Now, it is possible to take an actual cash reward, which generally comes to you in the form of a check or bank deposit. Alternatively, you can redeem your cash back reward as a statement credit. 

The cash back reward offered will come to you in different ways, depending on your credit card issuer. You may receive an actual redeemable amount, or you may earn reward points. When rewards come as bonus points, each point is usually worth roughly 1 cent, but the value of the points will often be determined by how you use them. Your primary method for earning points is by spending money, although you can also earn points via one-time sign-up bonuses. If you use your credit card to take out cash advances, the advances will not count as purchases, and you won’t receive bonus points against the amount. 

Something to note is that some cash back cards will only offer statement credit. Such terms can be excellent if you are looking to save on your credit card statement. However, those same terms can leave you in a catch-22 situation. To earn statement credit, you need to spend with your credit card. But then to spend your statement credit, you will end up putting more charges on your credit card. For that reason, your cash back credit card is most useful when it gives you a few different cash back redemption options. It is also worth bearing in mind that to get your hands on such cards, you will need a good credit score. Some great cash back credit cards that can help put a dent in the outstanding amount on your credit card statement are listed below.

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Capital One Quicksilver Cash Rewards Credit Card

First things first, this cash back rewards card helps you get out of the catch-22 situations mentioned above. The Capital One Quicksilver Cash Rewards Credit Card gives you multiple ways to redeem your earned points. You can, of course, use what you have received as a statement credit as well as claim actual cash via a check. You can also spend your reward on gift cards or use them to cover your purchases straight away without it affecting your statement at all. The Quicksilver card offers an actual amount instead of points, with you earning 1.5% on every purchase. You will come to find that a lot of rewards cards, cash back or otherwise, offer some form of intro reward. This Capital One card does just that with a $150 bonus after you have spent $500 in the first three months with the card.

Another thing that you may find with reward cards is that they charge an annual fee; however, this Capital One card doesn’t. There is also a 0% APR rate for the first 15 months. After that period, a variable APR will kick in with rates between 15.74% and 25.74%. The same 0% APR rate applies to balance transfers for the first 15 months. 

Statement Credit

Blue Cash Preferred Card from American Express

Another great cash back credit card is the Blue Cash Preferred Card. Now, this is one of those cards that does charge an annual fee, and it is high; $95, to be exact. However, the card makes up for that with an excellent reward offering. Luckily, American Express has ensured that you can use those rewards towards a statement credit. You are also able to claim actual cash back, gift cards, and you can apply your rewards directly towards purchases.

Now its time to talk about rewards, and there are a lot. To begin with, you can earn 6% per year on purchases in U.S. supermarkets until you have reached a $6,000 limit. After you have reached that limit, the cash back rate will go down to 1%. You can earn another 6% on money spent on select streaming services. You will also receive 3% cash back on transit options (taxis, buses, etc.), as well as 3% on U.S. gas station purchases. A cash back rate of 1% applies to any purchases that don’t fit into those categories. The current credit card sign-up bonus that Amex offers is a $300 cash bonus reward after you have spent $1000 in the first three months. 

If you opt to make use of the Blue Cash Preferred Credit Card and its excellent reward offering, you will receive more than just the $300 sign-up bonus. You will also receive 0% APR on both purchases and balance transfers for the first 12 months. After 12 months have passed, your card will have a variable APR of between 14.74% and 25.74%.

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Bank of America Cash Rewards Credit Card

The Bank of America Cash Rewards Credit Card cash back rewards are less straightforward. However, if you can wrap your head around the card’s reward system, you can benefit from the offering and then redeem your cash back amount as a statement credit. The sign-up offer is generous — you get $200 after you spend over $1000 in the first 90 days after opening your credit card account. The other ways that this Bank of America card rewards points are more complicated. You can earn cash back at a rate of 3% on purchases in a category of your choice: gas, online shopping, dining, and more. You then earn 2% on purchases made at grocery stores, with 1% offered on all other purchases. The 3% and 2% options have a maximum spending limit of $2,500.

After you have reached that cap, the rewards revert to 1%. If you are a member of Bank of America’s premium rewards program ‘preferred rewards,’ you can enjoy an additional 25% to 75% value on your cash back amount.

You might think that this card would have an annual fee, but that isn’t the case. On top of that, there is also an introductory 0% APR period that lasts 15 billing cycles. After that point, a variable APR between 15.74% and 25.74% will apply.

Travel Rewards Credit Cards

As well as cash back rewards credit cards, you can make use of a travel rewards credit card to provide you with a statement credit. When discussing a travel rewards card, it makes sense that you would go straight to thinking about how you can use the credit card to save on travel. You are not wrong to think like that, but, like the cash back card, you can also put your rewards towards statement credit. As well as earning points to spend, you can earn direct statement credit for specific travel purchases. As an example, some travel rewards credit cards will offer statement credit when you have used your card to pay the TSA PreCheck application fee. Travel reward cards provide the most value for points when used on travel purchases. However, that’s not to say you can’t claim a statement credit from your travel rewards credit card. 

However you choose to redeem your benefits, you will again need a good credit score and should expect the card to have an annual fee and a higher APR. 

Co-Branded Cards

When exploring travel reward credit cards, you will come across co-branded credit cards. These cards are rewards cards; you earn the best rewards by using the card for purchases with the affiliated brand. With any travel rewards credit card, you need to consider blackout dates. Such dates are implemented by a card issuer or airline to stop you from earning points during the busiest times of the year. As well as the possible travel savings, you can also expect no foreign transaction fees when using a travel rewards card. These cards are the modern alternative to traveler’s checks, which means they need to be usable not just at home but all over the world. Let’s take a look at some travel rewards credit cards.

Chase Sapphire Preferred Credit Card 

Chase has a few great options when it comes to credit cards. Some of these cards offer points, with the Chase Sapphire Preferred Credit Card being your best option. You redeem the points you earn with a Chase rewards card through the Chase Ultimate Rewards program. Through this program, you can claim a statement credit, among other things. In terms of a statement credit, 1 point is equal to 1 cent. Now how do you earn those points? 

This card is a travel rewards card, so expect some favoritism towards travelers. You can earn 2 points per dollar spent on travel and dining purchases. You will receive 1 point per dollar on any other purchases. The sign-up bonus offer delivers 60,000 points after you have spent $4,000 in purchases in the first three months of owning the card. To give some actual value to those points: 60,000 points are worth $750 when used for discounts towards travel. That is because points with Chase are worth 25% more when redeemed against travel purchases.

When your points get redeemed as a statement credit, you still receive an enticing $600. Most travel rewards cards will let you transfer your points directly to an airline or hotel loyalty program to claim membership rewards through their platform. In this case, Chase enables you to do that with a 1:1 point ratio. 

The Sapphire Preferred Credit Card has a $95 annual fee, which, depending on your spending, you may be able to cover with reward points. The variable APR rate is between 15.99% and 25.99%.

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The Platinum Card from American Express

The Platinum Card from American Express is one of those cards that offer direct statement credit for select purchases. You can earn up to $200 in statement credit per year when you use the card to pay for airline fees. Checked bags and in-flight refreshments are just some examples of eligible purchases. You can also earn a $100 statement credit every four years after you apply for Global Entry. If you prefer to use TSA PreCheck, you will receive $85 every four and a half years after you apply. Though not statement credit, you do receive $15 in Uber Credits each month, with an extra $20 in December. That adds up to $200 a year that you can spend. 

The Platinum Card does offer points that you can redeem against your billing statement. You can also use them for booking or upgrading your travel options, for gift cards, or as a direct means of purchase. The introductory points reward offers 60,000 membership points after you have spent $5000 with your new card in the first three months. You can earn a further 5 points per $1 spent when booking directly with airlines or through amextravel.com. The same 5 points per dollar apply to hotel bookings prepaid through Amex Travel. You then earn the standard 1 point per dollar on any other purchase.

The extra statement credit and point earning possibilities may make you want to go ahead and apply for this card right away. Maybe give it a second thought — the annual fee for this card is $550.

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Purchase Returns

If you are not happy with a particular purchase, for whatever reason, it is only fair to expect a refund. If you have made your purchase online, then a cash refund is not possible. Instead, you will see the refunded amount as a statement credit on your credit card bill. Getting statement credit works the same way for in-store purchases. If you have paid with your credit card, the store will make your refund straight to the credit card issuer. It will then show up as statement credit.

All of this statement credit. How do I use it?

Redeeming your credit card statement credit is usually done via your online credit card account. Log in to your account to view how much statement credit you have. You can then select purchases to redeem your credit against, as well as choose how much of your credit you wish to use. Alternatively, you can call up your credit card issuer and redeem your credit over the phone. 

Though it is easy to redeem statement credit, it is not always instantly applied to your account. It will depend on your credit card company. It can take one or two billing cycles for your redemption to show up, so ensure your budget plan takes that into account. You don’t just have to redeem your statement credit to minimize the amount that you owe. You can also use the credit against purchases directly and avoid going into the red altogether, although you won’t earn additional credit this way. 

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Minimum Terms

It is handy to know that some credit card issuers have a set minimum redemption amount for statement credit rewards. These minimum terms mean you must accumulate a specific amount of statement credit before being able to use it. On top of that, you also need to consider whether your statement credit has an expiration date. Some cards will let you keep your credit for the duration of your time as a cardholder, whereas others may reset your statement credit after a set period. You need to pay attention to these two factors to make the best use of your credit. There may also be a restriction on how much credit you can use at once. Generally, it is better to use your credit as you receive it instead of saving the credit for one large purchase.

These statement credit terms will differ by card provider, so ensure you review the card details and terms and conditions thoroughly. 

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Statement Credit

Even with all the statement credit in the world, don’t forget what you owe.

Smart usage of your available statement credit can bring your outstanding balance down drastically, and thus save you some money. However, you may still need to cover the minimum payment on your outstanding balance. Keep this in mind as it is especially true if it takes a couple of billing cycles for the statement credit you redeemed to reflect on your account. Missing the minimum payment because you think you are all paid up is no excuse and calls for better debt management. The best thing to do is get in touch with your card issuer to ensure that you don’t have an outstanding balance. The alternative is a late payment fee, and possibly a hit to your credit score. Accidents do happen. If you miss a payment and have a good track record, get in touch with your credit card company to see what they can do for you.

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Statement credit isn’t for everyone.

Statement credit can be a handy tool for saving on your credit card billing statement. But it is not the only way to save money with a credit card. You will have to find a credit card that best suits your preferences and circumstances. A travel rewards card can offer statement credit while also offering great discounts on travel; points redeemed on trips are more valuable than the same points if you redeem them on a statement credit. Perhaps traveling isn’t your thing. If so, a standard cash back credit card will allow you to claim a selection of rewards that can help you save as you shop. 

Whatever you do, don’t be one of the 31 percent of U.S. credit cardholders who don’t claim their rewards. 

Do you take advantage of credit card rewards? What are the most significant savings you have made using statement credit?

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