Santa Claus comes around just once a year. In the meantime, there are Credit Cards.
  • Credit Card Refund

    When you buy an item using your credit card, you will have to request for a refund if you have to return the item. This amount cannot be refunded to via cash and will be credited to your credit card account.

    The process of a credit card refund will start immediately after the merchant has agreed to refund the amount that is owed to you, once you return the item. However, If the merchant is unable to return the amount to you, you could use the benefits of return protection. You can check with your credit card issuer regarding the protection policy.

    How Credit Card Refunds Work

    The credit card company pays the merchant you bought the item from. The amount will be deducted from your credit card account after the credit card issuer approves of the transaction. You can then pay the issuer back at a later date.

    Credit card networks process all transactions between the credit card issuer and the merchant. The merchant will have to send your amount to the credit card issuer before the issuer can credit your account. This is why all credit card refunds generally take up to many days to process.

    How Long a Credit Card Refund Takes

    All return transactions need to go through credit card networks, and so it can take many days for the credit to reflect in your account. The time it takes to get the refund can differ based on the method of return. If you returned the item in-person, a few merchants will credit your account almost immediately. Usually, it takes up to 14 business days to get the refund.

    The Difference Between Refunds and Chargebacks

    A credit card refund happens once you make a purchase, return the item and the purchase amount is returned and credited to your account.

    A credit card chargeback will reverse the original amount that has been charged to your account. This takes place if you file a dispute with the credit card issuer.

    The refund process is initiated by the merchant, and for a chargeback, it is initiated by the credit card issuer.

    A chargeback can take a long time as your credit card company has 90 days to resolve the dispute. It also has up to 150 days to complete the process of reversing the charge.

    FAQS on Credit Card Refund

    1. What will happen to the reward points that I earn from the purchase that has been refunded?

      All credit card rewards that you earn when the amount is refunded will disappear after the refund has been processed. The policy had been put in place to prevent people from taking advantage of the reward point system.

    2. Will my credit score be affected by a credit card refund?

      No, a credit card refund will not directly affect your credit score. It could reduce your credit card account’s credit utilisation ratio. When you use 30% or less of the card’s credit limit, this will help you in avoiding a negative impact on the score. The amount of the returned item which has not been processed and increases your credit utilisation ratio over 30% could arm your score until the refund process is complete.

    3. Will a credit card refund go toward my payment?

      The money that is refunded to your credit card account will not be considered as a payment or even a partial payment towards the monthly bill amount.

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