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Credit card refund rules: everything you need to know

Credit card refund rules: everything you need to know
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Just because we’re spending more time at home, doesn’t mean we can’t have the occasional shopping fix. But buying items online can often lead to disappointment, so it’s a good idea to know about the credit card refund rules just in case. Let’s take a look at seven things worth knowing when it comes to refunds.

1. The refund must go to the credit card used for payment

A refund can only be made to the card you used to pay for the goods in the first place. It cannot be paid to another credit card or into a bank account.

2. A refund to an empty card will result in a negative balance

When a refund is made to a credit card with no outstanding balance, the account will end up with what is known as a negative balance. This just means that your account will be in credit.

How a negative balance appears on your account can vary depending on the credit card provider. Generally, a refund tends to appear on your statement in the same way as a transaction made by you when you pay your credit card bill.

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3. Negative balances can be transferred

If the refund is for a large amount, it is probably worth arranging to transfer the money to a current account. This will allow you to earn interest on the amount. You will need to contact your credit card provider and they can arrange this for you.

Alternatively, you can choose to leave the balance on your credit card and use it for future purchases.

4. You can only transfer credit amounts

If you owe money on your credit card, then the refund will reduce the outstanding balance.

According to the credit card refund rules, you can only transfer the amount by which your account is in credit.

So, if you owe £200 on your credit card and receive a refund of £800, you will end up £600 in credit. The maximum amount you will be able to transfer is £600.

If you owe £1,000 on your credit card and you receive a refund of £200 you will end up owing £800. You will not be able to transfer the refund amount.

5. The Consumer Rights Act protects all credit card purchases

The Consumer Rights Act protects you in the event that you purchase faulty goods. This includes the right to a full refund within 30 days. After 30 days, you can get a repair or replacement.

Further details on the Consumer Rights Act 2015 are available on the gov.uk website.

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6. Your credit card provider is jointly liable

Thanks to Section 75 of the Consumer Credit Act, your credit card provider is equally responsible for any breach of contract by the retailer for purchases greater than £100 and less than £30,000.

This means that if something goes wrong with your purchase and you want a refund, you don’t necessarily have to contact the retailer. You can claim a refund from the credit card company.

7. Some PayPal transactions are not protected

For credit card transactions using PayPal, Section 75 protection applies if you are buying from a company that has a ‘Commercial Entity Agreement’ with PayPal.

PayPal transactions to companies without this agreement are not eligible for Section 75 protection.

However, PayPal has its own buyer protection, so it’s worth checking their terms and conditions if you use PayPal regularly.

Further information

For further details about credit card refund rules, check out our article on how refunds on credit cards work. Information regarding Section 75 is available in our article on whether credit card payments can be reversed and from the Money Advice Service.

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