How does a refund on a credit card work?

How does a refund on a credit card work?
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If you don’t have a credit card, you may not be aware that you can get a refund on a credit card purchase if you are not happy with it. But how does a refund on a credit card work? Read on to find out.

How does this type of transaction work?

Once you request a refund, the retailer doesn’t pay you directly. Instead, they pay your credit card provider, who then credits your account with the amount received from the retailer.

How long does it take for a refund to go back on your credit card?

The time taken for the refund depends on the following:

  • The retailer’s return policy
  • Whether the purchase was online or via a retail store
  • How quickly the goods are returned to the retailer
  • Your credit card’s billing cycle

Generally, you should expect to wait around five to 10 days for the refund to appear on your credit card.

What does a refund look like on a credit card statement?

This can vary depending on the credit card provider. Many credit card companies show a refund like any other credit to your account.

It will be treated in the same way as a transaction that takes place when you pay your monthly credit card bill. The main difference is that the refund will come from a retailer.

If you have an outstanding balance, your card provider will minus the refund from the outstanding balance.

What happens if a refund goes to a credit card with no balance?

So, how does a refund on a credit card work when there is no outstanding balance?

Once the refund is complete, it will appear as a credit on your account. This is often called a negative balance, meaning that your card provider owes you money.

There are two different ways you can deal with a negative balance:

  • Leave the balance on your card and use it to make future purchases until the balance is reduced.
  • Ask the credit card company to transfer the balance to your bank account.

Could you be rewarded for your everyday spending?

Rewards credit cards include schemes that reward you simply for using your credit card. When you spend money on a rewards card you could earn loyalty points, in-store vouchers airmiles, and more. MyWalletHero makes it easy for you to find a card that matches your spending habits so you can get the most value from your rewards.

What happens when a balance is transferred to a bank account?

This varies depending on the credit card provider. There are some general rules that may be applied:

  • Your card provider will not allow you to transfer the refund amount if your account is not in credit.
  • The balance must be transferred to a UK bank account.
  • The UK bank account often needs to be one that you nominated when you set up your credit card account.
  • It can take around five to 10 working days to process the request.

Take home

If you require a refund on your credit card, it’s best to deal with it sooner rather than later.

When dealing with a refund for a large amount, contact your credit card provider and arrange a transfer. It’s better that your card provider is not holding your money, since it could be put to good use.

If you are considering applying for a credit card, check out our top-rated credit cards. Citizens Advice also has some advice on choosing and applying for a credit card.

How these 5 credit card ‘must-knows’ could help you…

We all know that a bad credit history makes it hard to borrow money – but did you know that improving your credit score could also help secure lower interest rates on credit cards, saving you hard-earned cash?

Find out how you could improve your credit score, and your credit-application chances, with our free report “5 Things To Know Before You Apply For A Credit Card”.

Just enter you best email below for instant access to your free copy.

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