How do refunds work on credit cards?

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    Imagine you’ve just bought a pair of headphones for $100 using your credit card. But, the sound quality wasn’t great and they didn’t deliver on their promise of being noise cancelling, so you return them. 

    Here’s how the refund process would work:

    You head back to the store (or mail them back if you got them online) and return the headphones. The store processes your refund right then and there, initiating a reversal of the $100 charge back to your credit card account. This is like pressing the “undo” button on that purchase.

    Now, the waiting game begins. Refunds don’t hit your account right away. They usually take a few business days, sometimes even more than a week. Once the refund is processed, you’ll see a $100 credit on your credit card account. 

    If you didn’t already pay off your credit card for the month, this $100 credit will reduce what you owe. Let’s say you had a balance of $500 on your card. With the refund, it drops to $400. 

    If you did already pay your card you’ll have a $100 credit balance that you can use towards future purchases. And a lot of people don’t know that you can even request the credit card company send you a check or deposit it back into your bank account.

    If you earned reward points or cash back from buying the headphones, those would be deducted from your account when the refund is processed. It’s as if the purchase never happened, reward-wise.

    You’ll want to keep your eye on your credit card statement to make sure the refund shows up correctly. If things are taking longer than you think, then you should get in touch with the store or your credit card issuer to check on the status. Also, make sure to hang onto your receipt and any return documentation until the refund is reflected in your account (just in case you need to follow up).

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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