What is a statement credit?

In the world of credit card rewards, a statement credit is one of the most beloved benefits. How fantastic is it to run a charge on your credit card and know that at least a portion of it will be covered by your credit card issuer?

If you’re not familiar with the concept and would like to figure out how statement credits work, read on for everything you need to know—including which cards offer the best statement credit benefits.

What is a statement credit?

A statement credit is money that a credit card issuer, like Discover or American Express, credits to your account. It’s deducted from your card balance, but it won’t count toward your minimum payment. For example, if you bought something on your credit card and then returned it for a refund, that refund would be issued as a statement credit. Or you can redeem your cash back or rewards for a statement credit to reduce your credit card balance.

The other way you can get a statement credit—and my favorite way—is when it’s a benefit on your credit card. Some credit cards allow you to redeem cash back into credit, while some awesome credit cards issue statement credits in certain purchases categories.

For instance, if I had a credit card that offered a $20 monthly credit on bookstore purchases (and if it existed, I’d have it!), I’d go to a bookstore every month. In fact, I’d probably spend $30 each month, since I doubt I’d be able to keep my spending under $20 at a bookstore. The hypothetical credit card then would “forgive” me $20, and I’d only have to repay $10.

How to use a statement credit

Normally, there are no extra steps needed to use your statement credits when they’re part of your card’s benefits. Sometimes, you might need to enroll in an offer—like with Uber Cash and dining credits for the American Express® Gold Card—but after that, a credit will appear on your account automatically after you make an eligible purchase.

If you’re redeeming your rewards as a statement credit, you’ll need to go through your online account to do so. Note, however, that while redeeming cash back for a statement credit is a fair deal, redeeming your points or miles for it is usually not the best idea. When you do that, your travel rewards can lose a lot of value.

For example, if you redeem your Chase Ultimate Rewards points for a statement credit, the value will be 1 cent per point. It’s more than many rewards programs offer for this type of redemption, but you can get much more with other redemption options. Examples include an estimated 2 cents per point when you transfer your points to World of Hyatt Loyalty Program or 1.5 points if a Chase Sapphire Reserve® cardholder purchases travel through the Ultimate Rewards portal.

Some credits, like Uber Cash, will post immediately while others will require waiting anywhere from a few days to several weeks.

Credit cards that offer annual statement credits

We’ve gotten to my favorite part. Let’s talk about the cards that come with the most attractive annual statement credits.

Best credit cards with annual statement credits

Chase Sapphire Reserve

It’s impossible to talk about credit cards that come with annual credits and not talk about the Chase Sapphire Reserve. Its $300 annual travel credit is the stuff of legend. It’s automatically added to your account each card anniversary and applies to a wide range of purchases.

The qualifying purchases include flights, car rentals, hotel stays, cruises, discount travel sites (including Priceline, Expedia and Orbitz), public transportation (such as trains, buses and taxis), toll bridges, highways, parking lots, garages, timeshares and travel agencies.

As you can see, it’s easy to take advantage of this benefit, which already justifies more than half of the card’s $550 annual fee.

Citi Prestige Card*

The Citi Prestige Card ($495 annual fee) is another good option for frequent travelers. Its $250 annual statement credit offer is lower than that of the Chase Sapphire Reserve, but it also covers many purchase categories, including purchases from airlines, hotels, travel agencies, travel aggregators, tour operators, commuter transportation, including commuter railways, subways and bus lines, taxis, car services, limousines, bridge and road tolls, paid parking lots, garages, cruise lines and ferries.

Additionally, cardholders can get up to $100 back in fee credits for Global Entry or TSA PreCheck every five years.

The Platinum Card from American Express

The Platinum Card from American Express is another highly popular travel credit card. At $695 per year in annual fees, it offers a range of statement credits.

With this card, you can get $100 in credit for either Global Entry or TSA PreCheck every four years when you charge the application fee to your Amex, $15 in Uber ride credits each month (plus an extra $20 credit in December), a $100 hotel credit to use toward qualifying charges when you stay two or more consecutive nights with a brand in The Hotel Collection and up to $100 in statement credits for Saks Fifth Avenue purchases ($50 for January through June and $50 for July through December). The Amex Platinum also comes with up to a $200 airline fee credit each year to help you save money on incidentals—like baggage fees—when you fly with a specific airline of your choice.

Plus, you can get up to $189 in credits for a CLEAR® membership (on top of PreCheck or Global Entry), up to $240 in credits each year for eligible digital entertainment purchases (up to $20 per month, qualifying services include Peacock and the New York Times, among others), up to $300 on eligible Equinox memberships fitness credits per year (up to $25 per month, enrollment required) and up to $200 in credits for prepaid hotel bookings with Fine Hotels + Resorts or The Hotel Collection properties via American Express Travel.

All in all, it’s more in statement credits than offered by the Chase Sapphire Reserve or Citi Prestige, but these credits are also less flexible.

With the Chase Sapphire Reserve or Citi Prestige, almost any kind of travel purchase qualifies for a generous credit. That’s not the case with the Amex Platinum, which only offers statement credits for specific types of purchases. Even with the airline credit, you can only choose one airline, and you have to commit to that airline once per year in January. That doesn’t leave much room for choosing the best fares or options for your travels.

American Express Gold Card

As you can see, rewards credit cards mainly issue statement credits for travel purchases. Still, there are other options—for instance, the American Express Gold Card: a foodie’s dream come true.

For a $250 annual fee, you’ll get up to $120 in Uber Cash ($10 per month in Uber Cash, expiring at the end of the month) for rides and eats as well as up to $120 in dining credits ($10 per month, enrollment required) at eligible restaurants or ordering in through Grubhub and Seamless. That’s $240 per year to spend on delicious food!

The Gold also comes with an up to $100 credit with the Hotel Collection (when booking two or more consecutive nights through the American Express Travel portal).

The bottom line

A statement credit on your credit card is always a joy—it means you’re saving some money or getting rewards. Even though it doesn’t count toward your minimum payment, it lowers your balance. And if you get the right credit card, having statement credits on the list of benefits could be great news for your budget.

Interested in getting this kind of card? Head over to CardMatch and check offers tailored to your credit profile. Meanwhile, I’m signing off to use my monthly Uber Cash from Amex.

*As of January 2022, Citi Prestige Credit Card is no longer accepting new applications. Check back in the future for any updates on this policy. The information about the Citi Prestige® Credit Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.