What You Need to Know About Loans on Your Statement Before Choosing a Credit Card
With nearly a third of borrowers canceling their credit cards due to annual fees, it makes sense to consider if you’re getting enough value for the cost of owning a premium card. One overlooked way to maximize the value – is to understand all of the proposed credit scores before you sign up for a new card because they can offset the cost of the annual fee – provided that you do use them.
What is a credit statement?
A credit statement is money that goes back to your credit card, although, as Bankrate points out , it doesn’t count as part of the minimum payment on any outstanding balance you might owe. There are three types of loans for statements:
- Those earned by converting bonus points into a payment against your credit card balance.
- As a larger one-time welcome bonus based on reaching your total spend within months of opening your card.
- Smaller annual refunds based on purchases made from pre-defined companies or categories as stated in your credit card agreement.
The latter type – small boutique loans, usually costing around $ 100 each – are usually not taken into account when people sign up for a new card, even though they are easier to request compared to total spending bonuses (which often cost for thousands of dollars. in a short time).
Achievable credit reports can offset your annual fee
Most bonus cards come with some of these annual costs, which, if used, can offset annual fees, which are typically $ 100-550. This is why it is so important to choose a card that has credit statements that align with your existing shopping habits. For example, Chase Sapphire Reserve has the following credits in addition to the welcome bonus:
- Free Lyft Pink One Year Membership (worth $ 240)
- Free DashPass Membership for One Year (worth $ 120)
- US $ 300 Annual Travel Credit
- $ 100 Global Entry / TSA Pre-Check
- $ 60 to DoorDash account
That’s a total of $ 820, easily offsetting the $ 550 annual fee. But this is the important part: you really need to use these loans to realize this value. Sure, you don’t want to chase rewards by spending unnecessarily, but if you can use credits for items you’ve already bought, it’s a win-win.
For example, if you know for sure that you will be spending $ 300 on travel every year, then the travel loan is worth it. On the other hand, if you own a car and never use Lyft, then this loan may not be that important. The same is the case with the TSA Precheck Membership Credit: What credit is there if you are already a member?
Don’t forget to look for suitable statement loans
Since the credits on the statement are different for each card, you’ll want to take a closer look and find the one that works best for you and then compare that to other features like bonus point multipliers or cashback percentages. By choosing the card that best suits your spending habits, you’ll never again pay out of pocket for an annual fee again.