If you’re refunded for a purchase made with your credit card, the merchant typically credits the applicable purchase amount back to your credit card issuer who then credits your account for the refund amount. This is called a credit card refund, and it shows up as a credit on your statement.
Let's look at how credit card refunds work.
How long do credit card refunds take?
How long it takes to receive a credit card refund for a returned item is dependent on the merchant’s refund policy. A merchant refund policy can vary by merchant, and it should disclose their processing timeline for a qualifying refund.
Once a merchant has determined a credit card refund should be made/issued, the merchant will forward refund to the cardmember’s credit card issuer, who will post the credit to the cardmember’s account. It’s important that a cardmember review and understand a merchant’s return policy before making a purchase with their credit card.
What if a merchant won’t refund you?
Most sellers understand how refunds work and have processes to deal with returns. Some sellers may state in their policies that they deduct shipping costs, charge a restocking fee or have other fees for returns.
In some cases, you may not be eligible for a refund. The item might have been marked as a final sale, or the seller may only offer store credit. It's important to understand a seller’s return policy before making a purchase.
If a merchant refuses to issue a refund when you believe you're entitled to one, you can dispute the charge through your credit card company. You’ll provide supporting documentation, and the card issuer will review the issue and resolve the dispute – if your dispute is approved your account is refunded. You must contact your card issuer within 60 days of the credit card bill with the disputed charge, and the credit card company must resolve the dispute within 90 days of receiving the complaint. Keep in mind that you should only dispute a charge after you’ve attempted to contact the merchant and resolve the issue first.
What happens to rewards when you’re issued a refund?
You don’t typically get to keep points, miles, or cash back earned on a purchase you’ve returned. For example, if you earned 500 points on a $500 purchase, those points l would be deducted from your rewards account balance when the refund is processed. Refer to your card terms and conditions to understand your credit card issuer’s policy regarding a returned purchase and impact on earned rewards from that purchase.
How does a refund impact your creditworthiness?
In most cases, receiving a refund won’t affect your credit. Refunds aren’t usually reported to the credit bureaus and don’t appear on your credit report.
Does a refund count toward your credit card payment?
A refund does not count as a payment. While a refund credited to your account may reduce your overall balance (and, in some cases, the minimum payment ), you're still responsible for making at least the minimum payment by your due date.
If you have a balance that’s less than the refund amount, your card will have a negative balance once you receive your return credit. For example, if your balance is $0 and you receive a refund of $50, your balance will be -$50. Some issuers will apply the negative balance to new purchases you make with your card or mail you a check for the amount of balance.
