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Some things aren’t meant to be. If you made a purchase on plastic that isn’t working out, you might get a credit card refund. A refund issued to a credit card means the cost of the returned product will be credited back to the associated account. Depending on whether the purchase was returned in person or online, receiving a credit card refund for a returned item could take only a few business days or up to six weeks depending on the merchant.
Find the Best Credit Cards for 2024
No single credit card is the best option for every family, every purchase or every budget. We've picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
How Credit Card Purchases Work
A credit card issuer sets a credit limit for every cardholder. The credit limit acts essentially as a maximum loan amount. Whether the credit limit is $500 or $50,000, the cardholder typically can’t spend over their credit limit without paying down the balance. A balance is the amount of money owed to the credit card issuer by the end of a monthly billing cycle.
When a credit cardholder purchases an item from a retailer, the merchant requests money from the card issuer rather than from the cardholder directly. The card issuer pays the merchant the purchase amount electronically and adds the charge to the cardholder’s balance. The cardholder is then responsible for paying off the charged amount to the issuer. Making purchases with a credit card is useful for a few reasons: to earn points or rewards, to secure the ability to dispute charges and not be held financially responsible or to obtain added purchase protection when available as per the card agreement.
How Refunds Are Issued
Requesting a refund from the retailer for a returned item works the opposite way as the original purchase charge. The cardholder sends an item back to the merchant (or returns it in person) and the merchant pays the purchase amount back to the card issuer. Most retailers don’t allow a cash refund if the purchase was made with a credit card (this may be possible for debit card purchases, but not always).
Any purchase that earned points or rewards for the cardholder will have those earnings deducted from the rewards balance after the issuer credits the purchase to the cardholder’s account. If the cardholder uses an entire rewards balance before a refund is processed, then a negative rewards balance may exist in an account.
How Long Does a Refund Take to Process
The time it takes for a refund to process depends on the policies of both the retailer and the card issuer as well as the cardholder’s return method. Returns made in person will typically be processed faster than an item shipped back to a seller. Some retailers like Amazon claim a refund will be credited to the cardholder’s account within three to five business days after the return is processed. However, the returned item isn’t processed until Amazon (or the seller) receives the item by mail. It’s always good form to read the retailer’s return policy on its website before anything is sent back to the store.
After a return is processed by the merchant, it may take the issuer seven to ten business days for the purchased amount to be credited back to the cardholder’s account. If shipping an item, expect one to two billing cycles before a credit shows up on an account.
The Item Was Returned. Now What?
While waiting for a credit card refund to be credited to an account, it’s important to continue paying the balance before the end of each billing cycle to avoid any interest fees. Cardholders are still responsible for the purchase’s addition to a balance until the refund is processed. Credit cards typically have high Annual Percentage Rates (APRs) that could lead the cardholder to pay much more for an item than originally intended. Avoid paying extra by paying off the balance each month.
Use a card issuer’s online portal to check the credit card account periodically for negative credit. Although “negative” has a bad connotation, in this case a negative balance is a good thing to find on an account statement—it means a reduction in the amount owed. A credit card refund will process as negative credit that is deducted from an existing unpaid balance. If the balance is zero, then the online account statement will show a negative balance.
What to Do With a Negative Account Balance
Having a negative balance on a credit card account means a cardholder has extra credit that isn’t owed to the card issuer at that time. A negative balance may occur when a cardholder pays off an entire balance before a refund is processed. The negative balance will be applied to any future charges until it’s used up—effectively acting as prepaid balance.
If the cardholder has a large negative balance that is, for example, over $1,000, the cardholder has the right to request a refund by check, direct deposit or money order. Federal law requires the card issuer to at least attempt to refund the cardholder in an appropriate manner when requested.
Find the Best Credit Cards for 2024
No single credit card is the best option for every family, every purchase or every budget. We've picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
Bottom Line
Using a credit card to make purchases (especially large ones) can be beneficial for earning rewards, added purchase protection and potentially disputing charges. Requesting a refund from a retailer should be a fairly simple process that may take up to two billing cycles to show on a credit card account. Although the process can take longer than expected, it should be relatively painless for the cardholder. Make sure to avoid making large purchases that can’t be paid off while waiting for a refund.
FAQs
When requesting money back, the merchant will generally credit the refund to your original form of payment, so if you paid by card, you won't receive physical cash back. Your credit card issuer will then post a statement credit to your account, effectively reducing your statement balance by the refunded amount.
Can I get a refund if I paid by credit card? ›
Claiming a refund on something you've purchased with your credit card should be straightforward, particularly if you haven't used the goods or services you bought. Contact the retailer and provide them with the details of the credit card you used to make the purchase. Have your receipt to hand.
Can a credit card refund be transferred to a bank account? ›
Credit balance refunds are issued in the form of a check. The credit can't be applied to another credit card, checking, or savings account. The refund check is made out to the primary account owner and mailed to the address on file.
What happens if a credit card payment is returned? ›
The bottom line. If your credit card payment does not go through, your card issuer will typically charge you a returned payment fee. It could even add on a late payment fee, depending on the terms of your card agreement. Not only that, but your bank may also assess you for a “non-sufficient funds” fee.
What happens when you get a refund on a credit card Capital One? ›
Credit balance refunds will only be issued for payments over your current balance. If a credit card balance refund has been on the account for four billing cycles, Capital One will automatically issue a check, which you'll receive within 7-10 business days.
Who pays when you dispute a charge? ›
Who pays when you dispute a charge? Your issuing bank will cover the cost initially by providing you with a provisional credit for the original transaction amount. After filing the dispute, though, they will immediately recover those funds (plus fees) from the merchant's account.
Am I protected if I pay by credit card? ›
Credit card payment protection
This means that if there's an issue with the product you've bought or the company you've bought from goes into administration, the credit card company has equal responsibility to make sure you're not left out of pocket.
What happens if my credit card has a positive balance? ›
A positive balance on your credit card, also called a credit balance, is an overpayment or refund on your card. It's an amount that belongs to you, so it's the opposite of an amount you owe. Your next purchases will simply be deducted from the positive balance until your balance drops to $0.
Can a merchant reverse a credit card refund? ›
Answer: Once a refund has been made, it is permanent. The credit card or direct debit account will need to be charged again if the transaction was refunded by mistake.
What happens if you transfer money from credit card to bank account? ›
According to Discover, a wire transfer with a credit card is typically treated like a cash advance. This means you'll be charged a cash advance fee and a higher interest rate on the balance, and you'll also lose your grace period. From there, additional wire transfer fees can vary depending on your bank.
A credit card refund will process as negative credit that is deducted from an existing unpaid balance. If the balance is zero, then the online account statement will show a negative balance.
Where does a credit balance refund go? ›
When a refund is issued to your account, credit card issuers apply the refund to existing balances. If a credit card refund results in a negative account balance, the issuer will return the money. Alternatively, you could charge additional purchases to bring the balance back up to zero or more.
How do refunds work on credit cards Amex? ›
You can request a refund for an overpayment through your online account. After you choose the account you made the payment to, select 'Open a Payment Dispute' then choose 'I have a credit balance on my account' and click 'Continue'.
What to do if a merchant refuses to refund? ›
If asking the merchant for a refund didn't work, request a chargeback with your credit card issuer. Many card issuers let you dispute transactions by phone, mail or online. You may also be able to submit a dispute directly through your card issuer's mobile app.
What happens to the merchant when you dispute a charge? ›
When a cardholder disputes a transaction, the bank initiates a chargeback and contacts the merchant providing a reason code for the dispute. The merchant then has the option to either accept the dispute and the associated losses or fight the chargeback by providing evidence that the transaction was valid.
Why aren't refunds instant? ›
The bank cannot issue an immediate refund as the request has to be authorized by the merchant first. Once the merchant approves your request, they will give their bank authorization to return the funds to your account.
Will a returned payment affect credit score? ›
A dip in your credit score
If your payment is returned and you don't pay it within 30 days, it'll count both as a late payment and a missed payment, which can hurt your credit score if the issuer reports the missed payment to a credit bureau. The missed payment can stay on your credit report for up to seven years.
What happens if a credit card payment fails? ›
If you don't pay your credit card bill, you will have to pay late fees, increased interest charges and it can cause damage to your credit score. If you continue to miss payments, your card can be frozen, your debt could be sold to a collection agency and the collector of your debt could also sue you.
Will Capital One resubmit a returned payment? ›
Payment Processing
This may happen even if we credit your payment to your Account. We may resubmit and collect returned payments electronically. If necessary, we may adjust your Account to correct errors, process returned and reversed payments, and handle similar issues.
What happens if credit card payment is not done? ›
Initially, you will be hit with late fees that continue accumulating, making the balance harder to pay off. Interest charges also keep accruing on the unpaid balance, increasing what you owe. Your credit score will take a major hit too.
