Cash Back Vs Statement Credit – Is Any Better Option?

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These days, just about all credit cards offer some type of rewards to induce cardholder loyalty.

Two of the most common forms of rewards are cash back (money put into your bank account) and statement credits (money applied to your card’s outstanding balance). Cash Back Rewards and Credit Statements will put money in your pocket. However, one is more direct and the other requires a little forethought.

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

Pro tip

Cash back rewards and statement credits are two good options. It really comes down to which one is the best value for the money.

Going forward, we’ll go over some of the pros and cons of each redemption method and highlight some of the best reward credit cards.

The difference between cash back and statement credit

When it comes to cash back versus statement credit, both have pros and cons. At NextAdvisor, we almost always recommend that you redeem your points and miles for travel rewards (you’ll get the best bang for your buck). If you compare the two, here’s how to decide whether you should get cash back or a credit on your statement.

Cash back

“Cash backs work like a rebate,” says Ian sells, co-founder and CEO of Discount key, a discount platform for online sellers. “When you buy an item, the credit card issuer reimburses you for a percentage of your purchase. You can withdraw the money and spend it, or you can save it.

Cards that offer cash back rewards use specific structures. For example, the Amex Blue Cash Preferred card gives you 1% cash back on every purchase, plus 3% at the grocery store and 4% at the gas station. Meanwhile, other cash back cards have a flat rate of 1% to 2%. Other cards allow you to choose the categories in which you earn rotating money, such as online shopping or memberships.

At the end of the month, you can log into your account to view your cash back balance. You can often choose to have the cashback sent electronically to your bank account, or as a paper check or gift card. Some cards allow you to withdraw money as soon as you accumulate money. However, it’s common to have to wait and cash out once you hit a certain balance, like $ 25.

Credit on statement

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

Credit on the statement is similar to cash back in that you earn a percentage on every purchase you make. However, the credit on the statement is not sent to your bank account, as cash back rewards can. The money you earn can only be applied to your existing balance, which reduces the amount you owe.

A common example of statement credit is when you make a return. The original 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 the same way.

When to withdraw money

Timing is everything when it comes to redeeming rewards. Cash Back Rewards usually don’t expire, but that doesn’t necessarily mean you need to keep the money locked up.

Generally, you should use your cash back winnings when your account reaches a high balance or when you want to use that money for a purchase. For example, if you have $ 250 in cash back, you can cash out and use that money to buy a plane ticket for an upcoming vacation.

If you are considering closing your credit card account, you should definitely use your cash back. Otherwise, you risk losing these rewards.

When to apply the credit on the card statement

It makes more sense to apply the credit on your statement to your credit card balance in certain situations. For example, if you’ve recently made several large purchases and your balance is higher than usual, this might be a good time to use your credit on your statement.

However, experts agree that taking credit on a statement versus cash back really depends on how much it gives your money. For example, if you have a $ 100 credit on your statement and $ 60 cash back, you’re probably better off taking the credit on your statement.

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 as points for travel rewards.

Each card offers a different rewards structure, so it’s a good idea to compare multiple cash back cards to find the one that’s right for you. Also watch out for introductory offers which can offer great benefits for a limited time, like bonus points for the first few months.

Cards that earn more money

Choosing a cash back credit card is often a good idea. If you’re going to spend money, you might as well earn rewards on your purchases. Here are some of the best cards offering cash back rewards.

  • Introductory bonus:
  • Annual subscription :

    $ 0

  • Regular APR:

    14.99% – 24.74% Variable

  • Recommended credit:

    670-850 (good to excellent)

  • Apply now external link icon On the secure Chase site
  • Introductory bonus:
  • Annual subscription :

    $ 0

  • Regular APR:

    14.99% -24.99% (Variable)

  • Recommended credit:

    670-850 (good to excellent)

  • Learn more external link icon On our partner’s secure site
  • Introductory bonus:
  • Annual subscription :

    Annual start-up fee of $ 0 for the first year, then $ 95.

  • Regular APR:

    13.99% -23.99% Variable

  • Recommended credit:

    670-850 (good to excellent)

  • Learn more external link icon On our partner’s secure site See prices and fees, conditions apply.

Chase Liberty Flex

With the Chase Freedom Flex Card, you get 5% travel discount when you buy it through Chase Ultimate Rewards, 3% restaurant discount (including takeout), 3% drugstore cashback, and 1% discount on everything else. In the first year alone, you get 5% cash back at the grocery store, up to $ 12,000. You can also recover 5% in your highest expense category, up to $ 1,500.

Wells Fargo Active Payment Card

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

Amex Favorite Blue Cash

The Amex Blue Cash Preferred Card offers 6% cash back in grocery stores up to $ 6,000 in annual purchases. You can get a 6% discount on some streaming services, a 3% discount at gas stations and on public transport, and a 1% discount on all other purchases. As an introductory offer, Blue Cash Preferred cardholders can also earn $ 300 in credit after making $ 3,000 in purchases in the first six months. However, you can only redeem Cash Back for a credit on your statement.

Editorial independence

As with all our credit card notice, our analysis is not influenced by any partnership or advertising relationship.

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