What is a statement credit + reasons you might have one

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Ever browse through your credit card statement and come across a negative transaction? This is a statement credit, which is essentially money credited back to your account, reducing the amount you owe. Statement credits may appear on your account after making a return, redeeming cash back or disputing a charge. 

Keep reading to discover reasons you might receive a statement credit and how to redeem them to save money on your credit card bill. 

What is a statement credit?

A statement credit is money that your credit card company credits back to your account. Typically, statement credits appear as green or red with a negative to indicate that you’re receiving money, thus reducing your credit card balance.

Statement credits are usually applied automatically to your credit card bill, reducing the total amount you owe on your credit card. 

Keep in mind that statement credits aren’t the same as payments, and you must still pay your credit card bill by the due date. The only exception is if the statement credit you receive is more than the amount you currently owe on your credit card. In that case, you wouldn’t necessarily need to make a payment since the statement credit covers the balance. 

6 reasons you might receive a statement credit

Below are five of the most common reasons you might receive a statement credit. 

1. Making returns

The most common reason for receiving a statement credit is that you made a return. If you used your credit card to make the original purchase, you’ll receive your money back as a statement credit on your credit card account. 

2. Redeeming cash back rewards or points

Most types of credit cards offer cash back or points, which you can put toward your balance. When you redeem these rewards, they’ll show up as statement credit. 

3. Receiving a new cardmember bonus

In today’s competitive credit card market, many credit card companies will offer statement credits as an incentive to get new customers to sign up for their cards. For example, the Wells Fargo Active Cash® Card gives new cardholders a $200 cash bonus after they spend $500 within the first three months after opening the account. 

4. Applying for Global Entry or TSA PreCheck

Several credit cards offer cardholders a credit of $85 or $100 towards travel programs like Global Entry or TSA PreCheck. After you use your credit card to pay the application fee, you’ll receive a statement credit as reimbursement.

5. Receiving a price adjustment

Some merchants have price adjustments or “best price guarantees,” which allow buyers to get a partial refund if they can find the item at a lower price or if it goes on sale within a specific time frame. Therefore, you would receive a statement credit for the difference if you can find the item at a better price. 

6. Disputing a charge

You might dispute a charge for many reasons, such as fraudulent charges, billing errors or merchant issues. If you dispute a charge on your credit account and your credit issuer approves it, you’ll receive the money back in the form of a statement credit. 

How to use statement credit

Typically, statement credits are automatically applied to your credit card account, so you don’t need to take further action to redeem them. 

If you’re looking to apply your rewards as statement credit, you’ll have to do so manually in your account’s online portal. You can typically find this in the benefits section of your credit card issuer’s online portal or mobile app. 

Keep in mind that redeeming travel points as statement credit is generally not recommended since your points can lose value. For example, with the Chase Sapphire Preferred® card, you can redeem your travel points for 1.25 cents per point, while each point is only worth 1 cent if you opt for cash back. 

Improve your credit with Lexington Law Firm

Statement credits can help you save money on your credit bill from time to time. However, understanding statement credit and how it works is just one aspect of credit and how it works. 
If you’re looking to remove inaccuracies on your credit report, our team at Lexington Law Firm can help you get started. Learn more with a free credit assessment today.