Credit Cards

Cash Refund vs. Statement Credit: Is One Option Better?


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These days, almost all credit cards offer some kind of reward to encourage cardholder loyalty.

Two of the most common forms of rewards are cash back (money delivered to your bank account) and statement credits (money applied to your outstanding card balance). Both cash back and credit statements will put cash in your pocket. However, one is more direct and the other requires a bit of forethought.

It’s not always easy to discern which rewards are better. It all comes down to knowing how you plan to use the money. If your goal is to maximize credit card rewards, you need to think about the costs you’ll incur and whether you want the money applied to your balance or in cash.

pro tip

Cash refunds and statement credits are good options. It really comes down to what is the best value for your money.

Below, we’ll review some of the pros and cons of each redemption method and highlight some of the best rewards credit cards.

The difference between cash back and statement credit

When it comes to cash back versus statement credit, both have advantages and disadvantages. At NextAdvisor, we almost always recommend redeeming your points and miles for travel awards (you’ll get the best value). If you’re comparing the two, here’s how to decide if you should get a cash refund or a statement credit.

Refund of money

“Cash rebate works like a rebate,” says Ian Sells, co-founder and CEO of RebateKey, a rebate platform for e-commerce sellers. “When you buy an item, the credit card issuer gives you back a percentage of your purchase. You can withdraw the money and spend it, or you can save it.”

Cards that offer cash back use specific structures. For example, the Blue Cash Preferred® card from American Express gives you 1% cash back on purchases, plus 6% cash back at U.S. supermarkets. of fixed rate rewards from 1% to 2%. Other cards let you choose which categories you earn cash on on a rotating basis, like online purchases or subscriptions.

At the end of the month, you can log in to your account to see your cash back balance. Often, you can choose to send the cash refund electronically to your bank account, or send it as a paper check or gift card. Some cards allow you to cash out as soon as you accrue your rebate. However, it is common to have to wait and collect once you have reached a certain balance, such as $25.

credit statement

“With cash back, you get money back on every purchase. But with statement credit, the points you earn are used to pay off your credit card balance,” says Nate Tsang, founder and CEO of Wall Street Zen, a stock research platform.

Statement credit is similar to cash back in that you earn a percentage of every purchase you make. However, the statement credit is not sent to your bank account like a cash refund is. The money you earn can only be applied to your existing balance, reducing the amount of money you owe.

A common example of a statement credit is when you make a return. The initial purchase is added to your balance, and when you return the item, your balance decreases by the same amount. The card company automatically deducts the value, rather than writing you a check for the price of the returned item. Cash back in the form of statement credits works in a similar way.

When to withdraw cash

Timing is everything when it comes to redeeming rewards. Cash back rewards generally don’t expire, but that doesn’t necessarily mean you should lock your money away.

Typically, you need to redeem your cash back earnings when your account reaches a high balance or when you want to put that money toward a purchase. For example, if you have $250 in cash back rewards, you can cash out and apply that money to a plane ticket for an upcoming vacation.

If you plan to close your credit card account, you should definitely redeem your cash back. Otherwise, you may lose those rewards.

When to apply the credit to the card statement

Applying your statement credit to your credit card balance makes more sense in some situations. For example, if you’ve recently made several large purchases and are facing a higher-than-usual balance, it might be a good time to use your statement credit.

However, experts agree that taking statement credit versus cash back really comes down to the value you give your money. For example, if you have a $100 statement credit and a $60 refund, you’re probably better off taking the statement credit.

Other cash back options

If you want a credit card with the best cash back rewards, be sure to explore your options. Some credit cards allow you to redeem your cash back for other benefits, such as gift cards or points for travel rewards.

Each card offers a different reward structure, so it’s a good idea to compare multiple cash back cards to find the best one for you. Also keep an eye out for introductory offers that may offer great benefits for a limited time, like bonus points for the first few months.

Cards that earn more cash back

Choosing a credit card with cash back is usually a good idea. If you spend money, you could also earn rewards for your purchases. These are some of the best cards that offer cash back incentives.

  • Introductory Offer:
  • Annual quota:

    $0

  • ordinary APR:

    14.99% – 23.74% Variable

  • Recommended Credit:

    670-850 (Good to Excellent)

  • Apply Nowexternal link icon On Chase’s secure site
  • Introductory Offer:
  • Annual quota:

    $0 introductory annual fee for the first year, then $95.

  • ordinary APR:

    13.99%-23.99% Variable

  • Recommended Credit:

    670-850 (Good to Excellent)

  • Learn moreexternal link icon On our partner’s secure site View Rates & Charges, terms apply.

Chase Liberty Flex

With the Chase Freedom Flex card, you get 5% back on travel when you shop through Chase Ultimate Rewards, 3% back on restaurants (including takeout), 3% back on pharmacies, and 1% back on refund on everything else. You can also earn 5% back on rotating bonus categories each quarter up to $1,500 when activated.

Active Wells Fargo Cash Card

The Wells Fargo Active Cash℠ card offers unlimited 2% cash rewards on purchases. To redeem cash rewards, you can use the rewards as a statement credit, deposit the money into your Wells Fargo account, redeem the cash at an ATM, or get the money on a gift card. You can also earn $200 in cash rewards if you spend $1,000 on purchases within the first three months.

Amex Preferred Blue Cash

The Amex Blue Cash Preferred card offers 6% cash back at US supermarkets on annual purchases up to $6,000. You can get 6% cash back on select streaming services, 3% cash back at US gas stations and in transit, and 1% cash back on all other purchases. As an introductory offer, Blue Cash Preferred cardmembers can also earn a $300 statement credit after making $3,000 in purchases in the first six months. However, you can only redeem the cash back for a statement credit.

Editorial Independence

As with all of our credit card reviews, our analysis is not influenced by any association or advertising relationship.

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