Statement credit is a popular thing that every credit cardholder knows. But, not everyone is serious about finding out the answer to this: What is statement credit and how to use it? If you are still not clear, today is the best time for you to discover. Hanfincal will give you a chance to dive into it. Everything you need is in this article.
1. What is statement credit?
Statement credit is money paid to your credit card by your provider. It works exactly like a cash payment to your account. It is deducted from your card balance and appears as a negative number on your statement, but it does not count toward your minimum payment. It essentially lowers the amount you owe. You can use your cash back or rewards to get a statement credit to pay off your credit card debt.
Statement credits will appear as a transaction on your monthly statement, possibly under a different category. Bear in mind that even if you “pay” the majority of your balance with a statement credit, you must still make at least the minimum payment on the outstanding balance each month.
2. How to get statement credit?
Here are 5 ways to get statement credit:
2.1. Sign-up bonus
The first thing you can do to get statement credit is to sign up for a credit card with attractive bonuses. Many credit card companies provide statement credits as a perk for signing up for a new credit card. In some cases, these statement credits can only be applied to a specific purchase category, such as travel or dining, whereas others can be applied to any purchase.
2.2. Travel rewards
Redemption of travel rewards is an intriguing feature provided by credit card companies that allow cardholders to convert their available travel rewards to a statement credit for another purchase they want.
2.3. Cash back rewards
Many credit cardholders also exchange cash back rewards to get statement credit cards. How does this option function? Many credit cards offer cash back, and one way to redeem your rewards is through a statement credit. If you redeem in this way, the redemption amount should be posted to your account as a statement credit, reducing your card balance.
Some may allow you to choose between statement credits, checks, and deposits into a bank account, while others limit your options to just one.
2.4. Returns items
Returns from previous purchases can be an incredible way to get statement credit. When returning a previous purchase, whether online or in-person, the money is usually credited to the credit or debit card that you made the original purchase. The refunded amount is applied to your card account balance as a statement credit when this occurs.
2.5. Credit card perks
The final option is to obtain your statement credit through credit card perks. Using your card for specific purchases can sometimes result in statement credit. Many rewards credit cards provide statement credits as compensation for advertised perks. In some cases, you can simply use your credit card to make the necessary purchases, and the statement credit should occur on your account after that.
3. How to use statement credit?
In general, using statement credit is very simple. When statement credits are part of your card’s benefits, no extra steps are usually required to use them. However, in some cases, you should pay close attention to the following points to make it easier to use your statement credit:
- You may need to enroll in an offer and dining credits for a statement credit to appear on your account after making an eligible purchase. However, it processes most of the time automatically.
- If you want to redeem your rewards as a statement credit, you must do so through your online account.
Some notes here: redeeming your points or miles for statement credit is rarely good. This is because doing so reduces the value of your travel rewards significantly.
4. Statement credit vs. cash back
Here’s how to decide whether to take cash back or statement credit when comparing both.
- Cash back
- Cash back functions similarly to a rebate. Your credit card company gives you a percentage of the cost back when you buy something. You can either withdraw the money and spend it or save it.
- Cash-back cards have specific structures and set a fixed percentage of the purchase value for cash back.
- You can check your cash back balance at the end of each month by logging into your account. You can often have the cash back deposited electronically or as a paper check or gift card into your bank account.
- Statement credit
- The points you earn with statement credit are applied to your credit card balance.
- Statement credit works similarly to cash back in that you earn a percentage of your purchases. However, statement credit is not deposited into your bank account, unlike cash back. The money you earn can only be applied to your current balance, lowering the amount you owe.
Understanding what statement credit is and how to use it can help you make the most of it to reduce your current balance. There are many ways to get statement credit quickly and easily that Hanfincal shows for you above. Reread once more to make sure you do not skip any way to take advantage of a statement credit.