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 CardBank of America® Premium Rewards® credit card
  • 50,000 Bonus Points, redeemable for $500 credit.
  • Up to $200 travel credit to cover combined Airline Incidental and TSA Pre✓® / Global Entry expenses.
  • Bank of America Travel Rewards Credit CardBank of America® Travel Rewards credit card25,000 bonus points, redeemable for $250 credit for travel
    Bank of America Cash Rewards Credit CardBank of America® Cash Rewards credit card$200 bonus cash rewards, redeemable for $200 credit

    Citi Credit Cards, issued by our partner Citibank

    Credit CardBonus as a Credit to Account
    Citi Premier CardCiti Premier® Card60,000 bonus ThankYou points, redeemable for $600 credit
    Citi Rewards+ CardCiti Rewards+® Card15,000 bonus ThankYou points, redeemable for $150 credit
    American Airlines AAdvantage MileUp CardAmerican Airlines AAdvantage MileUp℠ Card$50 credit, in addition to 10,000 American Airlines AAdvantage bonus miles

    American Express Credit Cards

    Credit CardBonus as a Credit to Account
    Blue Cash Preferred Card from American ExpressBlue Cash Preferred® Card from American Express$300 bonus cash in statement credit
    American Express Business Gold CardAmerican Express® Business Gold CardUp to $300 credit on eligible U.S. advertising and U.S. shipping purchases
    Blue Cash Everyday Card from American ExpressBlue Cash Everyday® Card from American Express$200 bonus cash in statement credit
    American Express Cash Magnet CardAmerican Express Cash Magnet® Card$150 bonus cash in statement credit

    Chase Credit Cards

    Credit CardBonus as a Credit to Account
    Chase Sapphire Preferred CardChase Sapphire Preferred® Card
  • 80,000 bonus points, redeemable for $1,000 credit in travel or in select, rotating categories.
  • Up to $50 in statement credits towards grocery store purchases.
  • Chase Sapphire ReserveChase Sapphire Reserve®
  • 60,000 bonus points, redeemable for $900 travel credit.
  • $300 annual travel credit.
  • Capital One Credit Cards

    Credit CardBonus as a Credit to Account
    Capital One Venture Rewards Credit CardCapital One Venture Rewards Credit Card60,000 bonus points, redeemable for $600 travel credit
    Capital One VentureOne Rewards Credit CardCapital One VentureOne Rewards Credit Card20,000 bonus points, redeemable for $200 travel credit

    U.S. Bank Credit Cards

    Credit CardBonus as a Credit to Account
    U.S. Bank Altitude Go Visa Signature CardU.S. Bank Altitude Go Visa Signature Card20,000 bonus points, redeemable for $200 credit

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