What is a Credit Card Statement Credit?

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What is a Credit Card Statement Credit?

A credit card statement credit is a payment issued by a business and posted to your credit card account. Such payment shows up on your monthly statement as a credit. It can then offset expenses in your credit-card billing statement.

Most Common Reasons that You Receive a Credit

Your credit card company or merchants that have billed your card for purchases are usually the ones issuing statement credits. For instance, typical credits include refunds from merchants, credit card sign-up bonus issued by your card issuer, or credit card rewards that you redeem points or miles for.

When you make a purchase with your credit card and return it afterwards, a store may refund you a credit back to your card. As a result, the credit will effectively erase the previous charge for the purchase. There might also be situations that you get credit for a partial refund. For example, if you shop for auto insurance and switch to a new insurance policy, your current insurance provider will refund you for the remaining portion of unused insurance.

Statement credits by card issuers are also very common. For instance, credit card bonus is frequently in the form of a statement credit. And rewards points or miles that you have accumulated can sometimes be redeemed for statement credits too.

Some cards allow you to apply credits with no restrictions. However, some other cards may only let you apply credits to your account to pay towards purchases in specific spending categories. Common types of category-specific statement credits include credit for travel, grocery, dining, etc. Sometimes you may need to use an online tool of your credit card issuer to choose qualifying purchases to apply your category-specific credits.

Statement Credit vs. Other Forms of Cash Back

When you earn cash back rewards, some credit cards offer the option of redeeming rewards for statement credits. Sometimes you may have alternative options to receive direct deposits to your bank account or physical checks to your address. If you choose to receive a statement credit, the credit can reduce the current credit-card account balance. In the situation that your credit is more than the current balance, the remaining portion of the credit will be carried forward to the next billing cycle.

Is receiving a statement credit better than receiving a physical check? If you have a balance on your credit card, it is more convenient to receive and to redeem for a credit. On the other hand, if you do not have a balance on your card or need cash for other purposes, it might be better to have a check, because it is always more flexible to use the cash for what you want.

Are Statement Credits Taxable?

Statement credits issued by merchants for purchase refunds are definitely not taxable. Statement credits by card issuing banks usually require you to make purchases before obtaining the credits. The credits reduce the account balance and they are similar to rebates. In general, if you have to make a purchase prior to receiving a credit, such credit is equivalent to a rebate on your purchases and rebates are not classified as taxable income.

If the cardholder does not have to spend anything to earn a credit, the credit might be taxable. However, most U.S. credit cards require cardholders to complete qualifying purchases before issuing a credit as a bonus or rewards. Therefore, these are not taxable income. When you have tax questions, it is always best to consult a tax adviser.

A statement credit on a business credit card may not be taxable income by itself, but the credit would reduce the net amount of purchases. Consequently, the net amount to be deducted as business expenses will be lowered and it would make the net taxable income for the business higher, thus creating a net effect of higher taxable income for the business.

Credit Cards that Offer Statement Credits as Bonus or Rewards

A number of credit cards give out statement credits for the sign-up bonus or as a rewards redemption option. Below you will find a few credit cards that let you obtain a bonus in statement credit:

Bank of America Credit Cards

Credit CardBonus as a Credit to Account
Bank of America Premium Rewards Credit Card

Bank of America® Premium Rewards® credit card

Receive 60,000 online bonus points - a $600 value - after you make at least $4,000 in purchases in the first 90 days of account opening.
Bank of America Travel Rewards Credit Card

Bank of America® Travel Rewards credit card

25,000 online bonus points after you make at least $1,000 in purchases in the first 90 days of account opening - that can be a $250 statement credit toward travel purchases.
Bank of America Customized Cash Rewards Credit Card

Bank of America® Customized Cash Rewards credit card

$200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.
Bank of America Unlimited Cash Rewards credit card

Bank of America® Unlimited Cash Rewards credit card

$200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.

Wells Fargo Credit Cards

Credit CardBonus as a Credit to Account
Wells Fargo Autograph Card

Wells Fargo Autograph Card

20,000 bonus points when you spend $1,000 in purchases in the first 3 months - that's a $200 cash redemption value.
Wells Fargo Active Cash Card

Wells Fargo Active Cash® Card

$200 cash rewards bonus after spending $500 in purchases in the first 3 months.

Citi Credit Cards, issued by our partner Citibank

Credit CardBonus as a Credit to Account
Citi Strata Premier Card

Citi Strata Premier Card

70,000 bonus ThankYou Points after spending $4,000 in the first 3 months of account opening, redeemable for $700 in gift cards or travel rewards at thankyou.com
Citi Custom Cash Card

Citi Custom Cash® Card

$200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou Points, which can be redeemed for $200 cash back.
Citi Rewards+ Card

Citi Rewards+® Card

20,000 bonus points after you spend $1,500 in purchases with your card within 3 months of account opening; redeemable for $200 in gift cards at thankyou.com
Citi Double Cash Card

Citi Double Cash® Card

$200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou Points, which can be redeemed for $200 cash back.

American Express Credit Cards

Credit CardBonus as a Credit to Account
Blue Cash Preferred Card from American Express

Blue Cash Preferred® Card from American Express

$250 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months.
Blue Cash Everyday Card from American Express

Blue Cash Everyday® Card from American Express

$200 statement credit after you spend $2,000 in purchases on your new Card within the first 6 months.
American Express Blue Business Cash Card

The American Express Blue Business Cash™ Card

$250 statement credit after you make $3,000 in purchases on your Card in your first 3 months.
The Blue Business Plus Credit Card from American Express

The Blue Business® Plus Credit Card from American Express

15,000 Membership Rewards points after you spend $3,000 in eligible purchases on the Card within your first 3 months of Card Membership.

Chase Credit Cards

Credit CardBonus as a Credit to Account
Chase Sapphire Preferred Card

Chase Sapphire Preferred® Card

75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel.
Chase Sapphire Reserve

Chase Sapphire Reserve®

75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,125 toward travel when you redeem through Chase Travel.
Ink Business Cash Credit Card

Ink Business Cash® Credit Card

10% Business Relationship Bonus If you have the Ink Business Cash card plus a Chase Business Checking account on your first card anniversary
Ink Business Unlimited Credit Card

Ink Business Unlimited® Credit Card

$750 bonus cash back after you spend $6,000 on purchases in the first 3 months from account opening
Ink Business Preferred Credit Card

Ink Business Preferred® Credit Card

100,000 bonus points after you spend $8,000 on purchases in the first 3 months from account opening. That's $1,000 cash back or $1,250 toward travel when redeemed through Chase Travel
Ink Business Premier Credit Card

Ink Business Premier® Credit Card

$1,000 bonus cash back after you spend $10,000 on purchases in the first 3 months from account opening.

Editorial Note: The editorial content on this page is prepared by CardBenefit staff. Opinions expressed herein are author's alone, not those of the bank, credit card issuer, airlines or hotels, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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