What Is a $100 Statement Credit & How Does It Work?

The Nature of a Statement Credit

A statement credit reduces the total amount owed on a financial account, most commonly a credit card. It functions as an adjustment that decreases your outstanding balance. This credit is applied directly to your account by the financial institution.

A statement credit differs from receiving cash back or a direct deposit into a bank account. Instead of physical money, it is an entry that directly offsets existing or future charges on your specific credit card account. The credit is linked to that account and generally cannot be transferred or withdrawn as cash.

While a statement credit reduces your overall debt, it does not count as a payment toward your minimum monthly obligation. You remain responsible for making at least the minimum payment by its due date. The credit simply reduces the total balance that forms the basis for interest calculations and minimum payment requirements.

How a Statement Credit Reduces Your Balance

When a statement credit is issued, it is automatically applied to your credit card’s outstanding balance. For example, if you have a $500 balance and receive a $100 statement credit, your new balance effectively becomes $400.

The reduction in your balance can indirectly impact your minimum payment for that billing cycle, as the minimum payment is often a percentage of the outstanding balance. However, the credit itself does not fulfill the minimum payment requirement. You must still initiate a payment to cover at least the minimum due, even if your overall balance has been reduced by a credit.

You will typically see the statement credit appear on your monthly billing statement as a negative amount. Financial institutions may label this entry as “Statement Credit Applied,” “Refund from Merchant,” or “Rewards Redemption Applied.” Should a statement credit exceed your current outstanding balance, it will create a negative balance on your account, which then rolls over to cover subsequent purchases.

Typical Sources of Statement Credits

Statement credits are often used by financial institutions for promotional incentives or account adjustments. Common sources include:

Credit card sign-up bonuses, earned after meeting a specified spending threshold.
Specific purchase credits or reimbursements for spending in particular categories or with certain merchants.
Refunds for returned merchandise, processed directly back to the card.
Redemption of accumulated cash back rewards or points.
Annual credits from premium credit cards, designed to offset their annual fees.

Statement credits earned through spending are generally considered rebates and are not taxable income.