If you look at your credit card statement and see a negative transaction posted, it can be a little confusing. What you’re looking at is a statement credit. This credit lowers your card’s balance. There are different types of statement credits and whether you get one depends on the type of card you have and the circumstance. Here, we cover the basics of statement credits and what you should know.
[Read: Best Cash Back Credit Cards.]
What Are Statement Credits?
Credit card companies use statement credits to post money to your account and lower your balance.
“A credit on your credit card statement can come from a reward program, a sign-up bonus, a product refund, a price adjustment or a charge you are disputing,” says Shane Hurley, founder and CEO of RedFynn Technologies, which specializes in payment processing for small businesses. “You can receive a credit by making a qualifying purchase, redeeming reward points or travel credits, or returning an item for a refund.”
While statement credits can help offset what you owe on your credit card, they don’t replace or count toward your minimum monthly payments.
[Read: Best Credit Cards.]
How Do Statement Credits Work?
Statement credits may appear on your credit card account from a refund, overcharge or as a benefit. Although the credits add money to your account, they typically appear as a negative number. That’s because the credit amount is subtracted from your balance.
So if your credit card current balance is $200 and you receive a -$20 statement credit, you’ll owe $180.
If your statement credit exceeds your credit card balance, your account will show a negative balance. No need for alarm; it simply means that you have more money credited to you. Continuing to use your credit card on purchases can ensure you receive the remaining statement credit.
In some cases, a statement credit may be automatic. Other times you may need to request that your cash back come as a statement credit via your online account or enroll in a specific program.
When You Might Get a Statement Credit
Statement credits can be one of the benefits offered by reward credit cards. But there are numerous reasons you might get a statement credit. Some examples include the following.
A Returned Item
If you use a credit card to purchase an item, you typically get a statement credit if you return it and get a refund.
“With returns or refunds, it’s important to pay attention to your account balance to make sure any credit you’re expecting is promptly credited to your account,” says Gerri Detweiler, credit expert and author of “The Ultimate Credit Handbook: Cut Your Debt and Have a Lifetime of Great Credit.” She adds, “Occasionally merchants will verbally offer a refund but then fail to credit it promptly. When this happens, you could run out of time to dispute the purchase under the Fair Credit Billing Act.”
Disputed Charges
The credit might come from a disputed charge. Common examples are:
— Fraudulent charges. You see charges that you didn’t make on your credit card.
— Billing errors. You have duplicate charges or an incorrect amount.
— Incomplete purchase transaction. You buy something online but never receive the item, and the issue isn’t resolved after reaching out to customer service.
— Failure to process a refund. You return an item eligible for a refund, but the merchant doesn’t hold up its end of the bargain.
In these scenarios, if the credit card issuer approves the dispute, it will typically reverse the transaction — often referred to as a chargeback. The purchase charge will be refunded to your account as a statement credit.
An Eligible Purchase
Some credit cards offer automatic statement credits for certain purchases. These purchases can vary by card. For example, if you use your Chase Sapphire Preferred® Card to book a hotel through the Chase Travel portal, you’re eligible for a $50 annual credit.
Credit Card Rewards Redemption
If you have a rewards credit card, you may have the option to redeem your points or miles as a statement credit. Cash back credit card holders can choose a statement credit instead of a check or direct deposit into a bank account.
However, miles or points earned through a travel rewards card may be worth less when turned into statement credits.
A Welcome Offer
Some credit card issuers offer new cardholders a welcome offer just for signing up. To qualify for the welcome offer, you typically must meet certain spending requirements set by the credit card issuer.
While each issuer has different spending requirements and awards, some welcome offers may come as statement credits. For example, the Blue Cash Preferred® Card from American Express offers a $250 statement credit if you spend $3,000 within the first six months.
[Read: Best Travel Rewards Credit Cards.]
3 Credit Cards That Offer Statement Credits
Statement credits can come in many forms, but if you’re looking for them as a reward, some credit cards are better than others. Here are three top credit cards that offer statement credits.
Chase Sapphire Reserve®
The Chase Sapphire Reserve® card is a gem in the rewards space, offering generous benefits and multiple statement credits. The card includes a $300 annual travel credit and an up to $100 reimbursement every four years for the Global Entry, TSA PreCheck or Nexus application fee.
“Annual statement credits offset certain purchases up to a dollar limit each year. Make qualifying purchases and you’ll automatically see the credit on your statement. This benefit can go a long way to helping offset a card with a high annual fee,” says Detweiler.
The Platinum Card® from American Express
The Platinum Card® from American Express has an impressive list of statement credits, including:
— $200 hotel credit.
— $240 digital entertainment credit.
— $155 Walmart+ credit.
— $200 airline fee credit.
— $300 Equinox credit.
— $189 Clear Plus credit.
The card has a hefty annual fee of $695 but may be worth it if you’re a frequent traveler or can benefit from the other credits.
Capital One Venture X Rewards Credit Card
Capital One Venture X Rewards Credit Card offers a $300 annual travel credit and up to a $100 credit for Global Entry or TSA PreCheck. If you purchase a flight that the Capital One travel portal recommends you book immediately, you’ll receive a $50 travel credit if the price drops within 10 days. Additionally, if you find a lower price on travel and notify Capital One within 24 hours of booking, you’ll get a travel credit for the difference.
“If you are in good standing with your bank, ask about their credit card offerings. A solid relationship and a good credit score can net you a card with lucrative benefits,” says Hurley. “Strategically planning your credit card usage can save you money. Paying your balance off each month eliminates interest, and using your rewards enhances credit card benefits.”
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What Are Statement Credits? originally appeared on usnews.com
