How Does a Refund On a Credit Card Work?
4 Min Read | Published: June 19, 2024
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
A credit card refund happens when the cost of the returned item is credited back to your account. See how credit card refunds work and how long they typically take.
At-A-Glance
- A credit card refund happens when the purchase amount of a returned item gets credited back to your account.
- Most credit card refunds typically take between five and 14 business days to process, but this can vary.
- Once your refund gets processed, you may notice a negative balance on your account, which means the credit card company owes you money.
There are a number of reasons why you may opt to return an item that you purchased, and refunds are a common fact of life for many people today.
Understanding how credit card refunds work is essential for managing transactions and resolving potential disputes. In this article, we’ll dive deeper into credit card refunds, including timelines, policies, and important considerations for cardholders.
How Do Credit Card Refunds Work?
A credit card refund allows you to collect your money back on a purchase you made using your credit card. Typically, you’ll receive an account credit that equals the amount of your original purchase.
Once you request a refund with the merchant, you’ll likely need to send the item you purchased back to them or return it in person. Once the item is received and processed, the merchant will pay back the purchase amount to the credit card company.1
Does a Credit Card Return Affect Your Credit?
While credit card returns may not typically impact your credit score, they may in some cases. If a credit card refund causes your credit utilization rate to drop, for example, then it could have a positive impact on your credit score.2
Refund Processing Time
A credit card refund must go through the credit card company first. In general, you’ll need to wait anywhere from five to 14 business days for the credit card refund to show up on your credit card balance or statement, but this can vary.3 If you have to return an item in person, the credit will likely be applied quickly. In the event you have to ship back the item, however, you can expect a longer processing time.4
What Happens If You Get a Negative Balance After a Refund?
After you receive a credit card refund, you may notice a negative balance. While this may seem alarming, it’s no big deal. In fact, it’s a good thing as it means that you don’t owe the credit card company any money. Instead, the credit card issuer owes you money.
The next time you use your credit card to make a purchase, the company will apply the negative balance to your purchase. If you prefer to have the cash, and the amount is over $1,000, then you may be able to request that the credit card issuer send you a refund via direct deposit, check, or money order.5
Did you know?
A credit card refund is initiated by a merchant when you return an item. A credit card chargeback is initiated by your credit card company after you file a dispute over an item that was never received or was fundamentally different from what you had ordered.6
Frequently Asked Questions
After your refund is processed, you may lose any credit card rewards that you earned as a result of that purchase. Your credit card company may withdraw the cash back, points, miles, or other rewards.7
The funds from a credit card refund will not be applied to your credit card payment. It will be your responsibility to make the minimum payment when it’s due.8
If you don’t want to wait for your credit card issuer to process your refund, you may be able to ask the store for store credit instead.9
The Takeaway
A credit card refund occurs when you receive your money back on a credit card purchase. It typically takes between 5 to 14 business days to process. Once your refund has been processed, you may have a negative balance, which means the credit card issuer owes you money.
1, 3, 6, 7, 8 “How Do Credit Card Refunds Work?,” Bankrate
2, 4 “Credit Card Refunds Could Mean Losing Earned Rewards or Having to Pay Fees: Here's What You Should Know,” CNBC
5 “How Credit Card Refunds Work,” Forbes
9 “How Do Refunds Work on a Credit Card?,” U.S. News
Anna Baluch is a personal finance writer from Cleveland, OH. She enjoys helping people from all walks of life make smart financial decisions. Her work can be seen on Credit Karma, Forbes, LendingTree, Insurify, and many other publications. Connect with Anna on LinkedIn.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
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