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Rewards credit cards offer different ways for you to earn a little extra on your purchases and keep you as a cardholder through ways for you to pocket those rewards. Some of these options include redeeming rewards for cash back, merchandise, gift cards, travel or a statement credit. You may want to look into the option of taking a statement credit, as it has certain benefits that the other options don’t. Read on to find out what a statement credit is, what the benefits are and how you can get one on your account.

What is a statement credit?

A statement credit works just like a payment made on your account; it reduces the amount of money owed on your balance. If no balance was due and the credit resulted in a positive balance, it may show in green or within parentheses. Depending on your issuer, you may be able to cash out the credit balance or let it stay to cover future transactions. Each issuer will have different rules on how you can accumulate and manage statement credits, but most offer flexible options.

How can you get one?

There are different ways you can get a statement credit on your account, including:

  • The redemption of cash back rewards.
  • The redemption of travel rewards or by converting reward points or miles.
  • Through an intro bonus, a card-linked promotion or credit card perks.
  • Through a refund.
  • Overpayments.

Cash back rewards

The most popular way to get a statement credit is by redeeming credit card rewards. Cash back cards have the most flexible redemption options, but some travel and hotel cards will also let you convert points into a statement credit.

When choosing to redeem your rewards points for a statement credit, take these things into consideration:

  • Redemption rules: Most lenders won’t let you use a statement credit to pay the minimum amount due, so you’ll have to make this payment with your own funds. And some lenders require that you have a minimum amount in rewards available before redeeming for credit. For example, American Express won’t let you redeem rewards for a statement credit until you have a reward balance of at least $25 or more.
  • Consider point value conversions: Cash back credit cards will usually give a full 1:1 point conversion, but some travel and hotel cards may reduce the point value by half when you try to convert miles for a cash statement credit. It all depends on the card. A travel card, like the Discover it® Miles, lets you redeem the full value in statement credits for all travel-related purchases.
  • There are different ways to obtain and use a statement credit: You may not be able to use your statement credit on all your purchases. For example, credits for the Discover it Miles are only good for travel-related purchases. However, a card like the Citi® Double Cash Card (a NextAdvisor advertiser) offers statement credits equal to cash back in your account no matter the type of purchases made.

Intro bonuses and perks

An example of a credit card perk statement credit would be like the one you get with The Business Platinum Card® from American Express, which covers a Global Entry or TSA Precheck application fee every four years.

There are also statement credits that you can get in the form of intro bonuses and card-linked offers, so it’s important to read your card terms and agreement so you can maximize your rewards.

What are the benefits of statement credit?

When it comes to redeeming rewards, statement credits aren’t your only option

  • Issuer incentives: An issuer may save money in bank transfers and mailing fees, so they might offer incentives to customers who choose a statement credit over a cash-out, bank transfer or gift card.
  • Get full credit for rewards: You’re likely to get the full point value with a statement credit, especially from a cash back credit card or travel card that offers credit for travel-related purchases. For example, the Capital One® Venture® Rewards Credit Card lets you use earned miles as a statement credit for travel you’ve already booked. If you have enough rewards to cover the balance made in travel expenses, it would be like getting free travel.
  • Combine offers: When it comes to maximizing statement credit options, you may be able to combine offers. For example, the Blue Cash Preferred® Card from American Express offers a $250 statement credit after you spend $1,000 in purchases within the first 3 months (an intro-bonus type credit). You can save that credit and accumulate rewards to the tune of 6% cash back at U.S. supermarkets (up to $6,000 per year, then 1% after that) and on select U.S. streaming subscriptions. Build up enough rewards and request them as statement credit and use it to help pay down your balance.

However, don’t pick a card based solely on the reward structure or the ability to redeem rewards. You need to pick a card that fully aligns with your spending habits and lifestyle. It’s the only way you’ll maximize the reward system and earn enough rewards to make a statement credit worth it.

Information regarding the Discover it Miles, Citi Double Cash and the Capital One Venture Rewards card was prepared by NextAdvisor.com staff. Opinions expressed therein are solely those of the writer and have not been reviewed or approved by any advertiser. The information, including card rates and fees, presented on this page is accurate as of the date of the post.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.