Statement Credit
What a statement credit is, how applying rewards as a statement credit works, when it makes sense versus other redemption options, and how it appears on your account.
What Is a Statement Credit?
A statement credit is a reduction applied directly to your credit card balance. When you redeem rewards as a statement credit, the dollar value of those rewards reduces what you owe on your next statement.
Statement credits work like a payment: if you have a $1,200 balance and apply a $50 statement credit, your new balance is $1,150. You still owe the remaining $1,150 and must make at least the minimum payment, but the credit has reduced your total obligation.
How Rewards Are Applied as Statement Credits
Most card programs allow you to redeem points, miles, or cashback as statement credits in one of two ways:
Direct cashback: Programs like Citi Double Cash and Discover cashback deposit rewards directly as a statement credit or to your bank account. There is no conversion required. One dollar of cashback is one dollar off your balance.
Points converted to statement credit: Programs like Chase Ultimate Rewards, Amex Membership Rewards, and Capital One Miles allow you to redeem points as statement credits, but often at a lower value than other redemption methods. For example, Amex Membership Rewards points redeemed as a statement credit are typically worth 0.6 cents per point, compared to 1 to 2+ cents per point when transferred to airline partners.
When Statement Credits Make Sense
For cashback cards: A 2% cashback card should almost always redeem as a statement credit or bank deposit. Cashback has no better redemption than its face value.
For annual fee credits: Many premium cards include automatic statement credits for specific spending categories. The Chase Sapphire Reserve gives a $300 statement credit for travel purchases automatically. The Amex Platinum gives $200 in Uber Cash as monthly credits. These are statement credit benefits built into the card, not elective redemptions.
For points in emergencies: If you need to offset a large purchase and do not have a specific travel redemption planned, converting points to a statement credit provides immediate value. The value is lower than optimal travel redemptions, but it is guaranteed and immediate.
When Statement Credits Do Not Make Sense
If your points are worth significantly more through a transfer partner, redeeming them as a statement credit at 0.5 to 1 cent each is leaving value on the table. Chase Ultimate Rewards transferred to World of Hyatt can be worth 1.5 to 2.5 cents per point. Redeeming those same points as a 1-cent-per-point statement credit undervalues them significantly.
Statement Credit vs. Account Credit
A statement credit reduces the balance shown on your statement. An account credit is functionally the same but may appear immediately rather than on the next statement cycle. Both reduce what you owe. The distinction is mostly semantic and varies by issuer terminology.
Does a Statement Credit Count as a Payment?
No. A statement credit does not count as a payment toward your minimum payment due. You still need to make at least the minimum payment by the due date, even if you have applied rewards as statement credits. Failure to make the minimum payment can result in a late fee and reporting to credit bureaus.