Making purchases with a credit card can be extremely convenient — until you're looking to receive a refund.
While the credit card refund process itself is typically straightforward, it could mean waiting several days for your account to be credited, losing any rewards you earned from the purchase and still being liable for any potential associated fees.
Below, CNBC Select explains how credit card refunds work and some considerations you need to keep in mind.
What we'll cover
- What is a credit card refund and how does it work?
- How do credit card refunds work?
- Credit card refund disadvantages
- What to do if a merchant doesn't provide a refund
- Do credit card refunds affect your credit?
- How long does a credit card refund take?
- Bottom line
What is a credit card refund and how does it work?
After buying something with a credit card, you may realize at some point that you're no longer satisfied with the purchase and want to request a refund.How you receive a refund on a credit card purchase typically depends on the merchant's return policy. When returning an item, a merchant may offer store credit, money back or, in the case of "final sale" items, no refund at all.
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.
Credit card refunds don't directly impact your credit score, but if you receive a credit that significantly reduces your credit utilization rate to under 30%, it could boost your score.
How long does a credit card refund take?
A credit card refund can take several days to process since it has to go through the credit card networks. Depending on your credit card issuer and the merchant, the refund process generally ranges between five to 14 business days. That process can take a bit longer if you first need to ship an item back to a merchant.
If you see that the refund may appear on your card after your payment due date, you should make sure you have enough funds to cover the purchase to avoid any late fees.
Credit card vs. debit card refunds
The process of a credit card refund differs from a debit card refund since credit cards typically do not allow cash refunds. This is because when you make a purchase with a credit card, your credit card issuer pays for the purchase and then you pay the issuer back when you make payments to your account. That means the merchant needs to issue a refund to your credit card issuer before it can be credited to your account and that refund can only be received through the original payment method. This is also the reason why credit card refunds can take longer than cash or debit card refunds.
Credit card refund disadvantages
Although credit card refunds are generally straightforward, they may come with some disadvantages.
You could lose your rewards
Once you receive your credit card refund, any points, miles, cash back or other rewards earned will be deductedfrom your account. Depending on the credit card issuer, if a refund pushes you below the spending requirement for a welcome bonus that you earned, the bonus may be rescinded.
Losing a welcome bonus could be quite costly. For example, the Chase Sapphire Preferred® Card is currently offering a bonus of 60,000 bonus points after spending $4,000 on purchases in the first three months from account opening. That's worth $750 toward travel when you redeem through Chase Travel℠ or more when redeeming points through Chase's transfer partners.
Chase Sapphire Preferred® Card
On Chase's secure site
Rewards
Enjoy benefits such as 5x on travel purchased through Chase Travel℠, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases, and $50 annual Chase Travel Hotel Credit, plus more.
Welcome bonus
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 when you redeem through Chase Travel℠.
Annual fee
$95
Intro APR
None
Regular APR
21.49% - 28.49% variable on purchases and balance transfers
Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Foreign transaction fee
None
Credit needed
Excellent/Good
Terms apply.
Read our Chase Sapphire Preferred® Card review.
However, you may be able to keep your rewards by asking the merchant to refund you with store credit instead of a credit card refund. Just note that if you do this, you'll still be responsible for paying back the balance on your credit card account.
You could be stuck with any associated fees
If you've made an international purchase, credit card issuers may not refund any foreign transaction fees because it costs them money to process the transaction. That means depending on your credit card's policy, you could be stuck with having to pay the fees, so be sure to check with your credit card issuer.
Many credit cards also don't charge foreign transaction fees, making it easier to make any purchases while abroad. CNBC Select ranked the Capital One Venture Rewards Credit Card as a top card without foreign transaction fees due to its low annual fee and straightforward rewards structure (see rates and fees).
Capital One Venture Rewards Credit Card
Learn More
Rewards
5 Miles per dollar on hotel and rental cars booked through Capital One Travel, 2X miles per dollar on every other purchase
Welcome bonus
Earn 75,000 bonus miles once you spend $4,000 on purchases within 3 months from account opening
Annual fee
$95
Intro APR
N/A for purchases and balance transfers
Regular APR
19.99% - 29.99% variable
Balance transfer fee
$0at the Transfer APR, 4% of the amount of each transferred balance that posts to your account at a promotional APR that Capital One may offer to you
Foreign transaction fee
None
Credit needed
Excellent/Good
See rates and fees, terms apply.
What to do if a merchant doesn't provide a refund
If a merchant denies your refund request, you may be able to tap into your credit card return protection benefit, which effectively extends an eligible item's return policy. The Chase Sapphire Reserve®, for example, offers up to $500 in return protection coverage per eligible item, up to $1,000 per year. The coverage applies to eligible items in like-new or good working condition bought in the last 90 days, whether you paid in cash or with Chase Ultimate Rewards points.
Chase Sapphire Reserve®
On Chase’s secure site
Rewards
Earn 5X total points on flights and 10X total points on hotels and car rentals when you purchase travel through Chase Travel℠ immediately after the first $300 is spent on travel purchases annually. Earn 3X points on other travel and dining & 1 point per $1 spent on all other purchases plus, 10X points on Lyft rides through March 2025
Welcome bonus
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $900 toward travel when you redeem through Chase Travel℠.
Annual fee
$550
Intro APR
None
Regular APR
22.49% - 29.49% variable
Balance transfer fee
5%, minimum $5
Foreign transaction fee
None
Credit needed
Excellent
Terms apply.
Read our Chase Sapphire Reserve® review.
You could also try to dispute the charge with your credit card issuer if, for example, your package was never delivered or if you suspect a fraudulent charge on your account. The issuer will then investigate the dispute and refund you the full amount if your claim is valid. Many credit card issuers also offer $0 liability on unauthorized charges, such as the Citi Double Cash® Card and Blue Cash Preferred® Card from American Express.
Citi Double Cash® Card
Rewards
Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24
Welcome bonus
Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
Annual fee
$0
Intro APR
0% for the first 18 months on balance transfers; N/A for purchases
Regular APR
19.24% - 29.24% variable
Balance transfer fee
For balance transfers completed within 4 months of account opening, an intro balance transfer fee of 3% of each transfer ($5 minimum) applies; after that, a balance transfer fee of 5% of each transfer ($5 minimum) applies
Foreign transaction fee
3%
Credit needed
Fair/Good/Excellent
See rates and fees. Terms apply.
Read our Citi Double Cash® Card review.
Blue Cash Preferred® Card from American Express
On the American Express secure site
Rewards
6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations, 3% cash back on transit (including taxis/rideshare, parking, tolls, trains, buses and more) and 1% cash back on other purchases. Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.
Welcome bonus
Earn a $250 statement credit after you spend $3,000 in purchases on your new card within the first 6 months.
Annual fee
$0 intro annual fee for the first year, then $95.
Intro APR
0% for 12 months on purchases from the date of account opening
Regular APR
19.24% - 29.99% variable. Variable APRs will not exceed 29.99%.
Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Foreign transaction fee
2.7%
Credit needed
Excellent/Good
See rates and fees,terms apply.
Alternatively, you may be covered by purchase protection, which covers damage, loss or theft of recently purchased items.
Bottom line
Although credit card refunds are mostly beneficial, they can also mean losing any rewards earned on your credit card purchase or being liable for any foreign transaction fees. However, there are cards like the Capital One Venture Rewards Credit Card that can help avoid such fees (see rates and fees).
Just remember that a credit card refund solely depends on the merchant's policy. If a merchant refuses to issue a refund, you'll need to turn to your credit card's return protection policy (if it's offered) or dispute the charge with your credit card issuer for a chargeback. Credit card refunds can also take several days to process before it appears on your account so make sure you're able to cover the purchase you're fully refunded.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
