How do refunds work

Credit card refunds can take longer than cash or debit card refunds, but they offer you greater protection against fraudulent and disputed charges.

Other benefits include price protection, which ensures you always get the best price on your purchase, as well as return protection. You may be able to accumulate reward points on purchases when choosing to use your credit card over cash or debit cards. These perks are available on both personal and corporate rewards cards , with issuers offering customers everything from travel miles to cashback. When you return an item, you will lose any reward points you earned from that purchase.

Refunded amounts will also be deducted from any spending incentives, such as sign-up bonuses. Credit card issuers do this to stop customers abusing their reward programs.

The next credit card payment may be due before the refund is processed if you return an item toward the end of the billing cycle.

In this case, you will need to make the minimum payment to avoid late fees. You will also have to pay any interest or additional fees accrued from the purchase, as the refund will not offset these costs. When the refund is paid into your account, the amount will be taken off your current balance.

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No matter how careful you may be when making decisions regarding credit card spending, mistakes and mishaps can still happen.

You could purchase something that turns out to be defective or simply change your mind about the item. Regardless of the circumstances, you should be able to seek out a credit card refund from the merchant. The process usually begins after the merchant agrees to refund you for the item. If the merchant refuses to or is unable to, however, then you may be able to rely on return protection instead.

Consult with your credit card issuer for information on whether your situation meets the requirements to enact the protection policy. When you make a purchase with a credit card, your credit card company is who pays the merchant. The available credit on your account goes down after your card issuer approves the transaction. Then, you pay them back for the purchase when you make payments to your account.

Credit card networks are the companies that process the transactions between your credit card issuer and the merchants where you make purchases. So, the merchant has to send your refund back to your credit card issuer before they can credit your account for the purchase. That is why credit card refunds often take several days to process, and you can only receive a refund in the original payment method.

If you are making a return in-store, the merchant can sometimes pull your card details from the receipt; otherwise, you will need to have the same card with you. As well, your card issuer may not refund any foreign transaction fees because it costs them money to process an international purchase, so consult with them to know for sure. Since return transactions have to go through the credit card networks, it often takes several days to see the credit returned to your account.

The exact time can vary depending on your return method, the card issuer and the merchant. If you have returned the item in person, some merchants can credit your account quickly, but generally, it will take five to 14 business days. If you have mailed your return, you will also have to take shipping time into account. If you would prefer the refund to happen immediately, you can ask for store credit instead, but the purchase balance would then stay on your account.

A credit card refund occurs after you make a purchase and then have the purchase amount credited back to your account. A chargeback , on the other hand, reverses the original charge and can only occur after you have filed a billing dispute with your credit card company.

A chargeback can also take much longer because your card company has 90 days to resolve the issue and up to days to complete the charge reverse process. Many people specifically choose certain rewards credit cards based on the rewards rate and type offered, but unfortunately, any rewards that you may have earned on a purchase that was returned will be subtracted after the refund is processed this applies to cash back credits, sign-up bonuses or any other incentives that are granted by spending.

Understandably, this policy was put in place to prevent people from taking advantage of the system.