How Does a Credit Card Refund Work

Woman swiping a credit card through a reader
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You’ve probably been in this situation before: you purchase something from the store, but by the time you get home you no longer want or need it. Or, you make a purchase online and the item you receive doesn’t quite meet your expectations. Depending on the store’s return policy, you can typically return the item to the store to get a refund. If you used your credit card for the original purchase, you’ll get the refund back to your credit card.

Companies have different refund time limits. You may have up to 90 days to request a credit card refund for a purchase you made. You can find the company's refund policy on the back of your receipt or the company's website. Or, you can call to ask how long you have to request a refund.

How Long Do Credit Card Refunds Take

When you make the initial credit card purchase, you check your online account and see the transaction right away, but it isn't the same with refunds. This pending transaction after you make a purchase is just an authorization, not the real thing. Your credit card issuer puts a hold on those funds so you don’t spend that money somewhere else. The actual transaction doesn’t post to your account for a few days.

Credit card refunds seem to take longer, but in many cases, the refund takes the same amount of time. The different is that there’s no pending refund on your account.

The timing of a credit card refund depends on the retailer, the credit card issuer, and the method of the return. Some retailers will credit the refund back to your account right away when you make a return in person. You’ll see the refund credited to your account as soon as you check. In other cases, credit card refunds can take up to 30 days to show up on your account.

The refund will take longer if you’re returning the item by mail because you have to wait for the merchant to receive the returned item, then for them to process the refund.

When the refund is finally processed, it will show as a credit to your account. The amount of the refund will be subtracted from your outstanding balance.

Note that a credit card refund is different from a billing dispute. A refund is when you return an item to the merchant to have them credit the money back to your account. A billing dispute involves contacting your credit card issuer directly to reverse a charge to your account.

Payment Is Still Required

You may still have to make your credit card payment even if you’re waiting for a refund to process. It depends on the point in the billing cycle that your refund is processed. If your billing cycle closes with a balance and the refund hasn’t posted yet, you’ll be required to make your minimum payment as normal on or before the due date to avoid paying a late fee. Interest charged based on the original purchase amount won’t be subtracted from your account when the refund is processed.

Once the refund is posted to your account, your balance will go down by the amount of the refund. Or, if the credit card refund is more than your balance, you may end up with a credit to your account that you can use for future purchases. This is the case if you receive a credit card refund after you've already paid off your full balance.

Credit Card Refunds and Rewards Points

Returning an item that gave you rewards points will affect your rewards balance. Once the credit card refund is processed, rewards you earned will be reversed from your account. This prevents people from abusing the rewards system. If credit card companies allowed people to keep rewards points after returning the original purchase, you could imagine that people would take advantage of that to get free rewards points.

Refunding to a Different Credit Card

Most merchants will only allow you to receive a refund back to the credit card you made the original purchase with. If you don’t have the credit card available, you may be able to get a gift card for the amount of the purchase. The retailer can’t give you cash in lieu of a credit card refund because of how credit card transactions are processed.

When you make a credit card purchase, the credit card issuer pays the retailer on your behalf, even though you haven’t paid anything yet. If you ask for a refund, the retailer has to repay the credit card processor who’s already paid for your purchase. Many businesses can automatically pull up your credit card details by scanning your receipt. In other cases, you may need your physical credit card to have your refund processed.