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

50,000 Bonus Points, redeemable for $500 credit
Bank of America Travel Rewards Credit Card

Bank of America® Travel Rewards credit card

25,000 Bonus Points, redeemable for $250 credit
Bank of America Customized Cash Rewards Credit Card

Bank of America® Customized Cash Rewards credit card

$200 Bonus Cash, redeemable for $200 statement credit
Bank of America Unlimited Cash Rewards credit card

Bank of America® Unlimited Cash Rewards credit card

$200 Bonus Cash, redeemable for $200 statement credit

Wells Fargo Credit Cards

Credit CardBonus as a Credit to Account
Wells Fargo Autograph Card

Wells Fargo Autograph℠ Card

20,000 Bonus Points, redeemable for $200 credit
Wells Fargo Active Cash Card

Wells Fargo Active Cash® Card

$200 Bonus Cash, redeemable for $200 statement credit

Citi Credit Cards, issued by our partner Citibank

Credit CardBonus as a Credit to Account
Citi Premier Card

Citi Premier® Card

60,000 Bonus Points, redeemable for $600 credit
Citi Custom Cash Card

Citi Custom Cash℠ Card

$200 Bonus Cash, redeemable for $200 statement credit
Citi Rewards+ Card

Citi Rewards+® Card

20,000 Bonus Points, redeemable for $200 credit
Citi Double Cash Card - 18 month BT offer

Citi® Double Cash Card - 18 month BT offer

 

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 Bonus Cash, redeemable for $250 statement credit
Blue Cash Everyday Card from American Express

Blue Cash Everyday® Card from American Express

$250 Bonus Cash, redeemable for $250 statement credit
American Express Blue Business Cash Card

American Express Blue Business Cash™ Card

$250 Bonus Cash, redeemable for $250 statement credit
The Blue Business Plus Credit Card from American Express

The Blue Business® Plus Credit Card from American Express

15,000 Bonus Points, redeemable for $150 credit

Chase Credit Cards

Credit CardBonus as a Credit to Account
Chase Sapphire Preferred Card

Chase Sapphire Preferred® Card

60,000 Bonus Points, redeemable for $750 credit
Chase Sapphire Reserve

Chase Sapphire Reserve®

60,000 Bonus Points, redeemable for $750 credit
Ink Business Cash Credit Card

Ink Business Cash® Credit Card

$900 Bonus Cash, redeemable for $900 statement credit
Ink Business Unlimited Credit Card

Ink Business Unlimited® Credit Card

$900 Bonus Cash, redeemable for $900 statement credit
Ink Business Preferred Credit Card

Ink Business Preferred® Credit Card

100,000 Bonus Points, redeemable for $1,000 credit
New Business Card! Ink Business Premier Credit Card

New Business Card! Ink Business Premier℠ Credit Card

$1,000 Bonus Cash, redeemable for $1,000 statement credit

Capital One Credit Cards

Credit CardBonus as a Credit to Account
Capital One Venture X Rewards Credit Card

Capital One Venture X Rewards Credit Card

75,000 Bonus Miles, redeemable for $750 credit
Capital One Venture Rewards Credit Card

Capital One Venture Rewards Credit Card

75,000 Bonus Miles, redeemable for $750 credit
Capital One VentureOne Rewards Credit Card

Capital One VentureOne Rewards Credit Card

20,000 Bonus Miles, redeemable for $200 credit
Capital One SavorOne Cash Rewards Credit Card

Capital One SavorOne Cash Rewards Credit Card

$200 Bonus Cash, redeemable for $200 statement credit
Capital One Spark Cash Plus

Capital One Spark Cash Plus

$1,000 Bonus Cash, redeemable for $1,000 statement credit

U.S. Bank Credit Cards

Credit CardBonus as a Credit to Account
U.S. Bank Cash+ Visa Signature Card

U.S. Bank Cash+® Visa Signature® Card

$200 Bonus Cash, redeemable for $200 statement credit
U.S. Bank Altitude Connect Visa Signature Card

U.S. Bank Altitude® Connect Visa Signature® Card

50,000 Bonus Points, redeemable for $500 credit
U.S. Bank Altitude Go Visa Signature Card

U.S. Bank Altitude® Go Visa Signature® Card

20,000 Bonus Points, redeemable for $200 credit

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