How Long Does a Credit Card Refund Normally Take?

How Long Does a Credit Card Refund Normally Take?
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Point Editorial

A special occasion has come and gone, and even though your friend loves the extra sparkly llama sweater you bought her as a gift, it’s a size too small. Don’t stress. Whether you’ve paid with a credit or debit card, you can return your purchase and receive a refund. The main difference is how quickly your refund processes. 

It takes between seven and 10 business days for a debit card refund to be approved. For credit cards, it can take anywhere between three and seven days. 

Read on to learn more about how credit card refunds work, the associated processing time, and how they impact your credit score.  

How does a credit card refund work?

Refunds are common when shopping, so understanding the process is important.

There are two types of refunds: purchase refunds and refunds in the case of fraud

Debit and credit card fraud means that another party made purchases with your card that you didn’t approve. Most credit card issuers offer various forms of fraud protection and subsequent compensation. Be sure to notify your card issuer as soon as possible by filing a billing dispute to get your money back. 

When you make a purchase, you aren’t directly paying the retailer. Because you’re using borrowed funds, the credit card company covers the cost. You’re then billed for the purchases later, and the expense becomes part of your monthly payment. 

After purchasing an item, your available credit drops until you’ve paid for the expense. 

If you decide to return the original purchase, you won’t receive the refund immediately because you’re not directly paying the merchant. The merchant must approve a refund to your credit account so that the issuing company can process it. Receiving a refund doesn’t mean you don’t have to pay your minimum payment for the month. Refunds, instead, are account credits. 

The refund will show up on your credit card statement, but you may still have to pay any interest fees related to that purchase since you technically used your extended line of credit to buy the item. 

If you return a purchase in between billing cycles, you will likely have to wait until the next cycle for it to show up on your balance. If the refund does occur within the billing period, you will receive credit in your account, and you won’t owe as much when it is time to make your next monthly payment. 

If the returned item comes from another country, you can still obtain a refund. However, foreign transaction fees typically aren't included, and you still have to pay that cost.  

How long does a credit card refund take? 

The time frame for a refund to be fully processed is usually three to seven business days, but this can vary according to the circumstances. 

A significant factor in how quickly the process moves depends on the credit issuer. If you return an item by mail, that can also cause the process to take longer. 

If you are returning and disputing a charge, either through a physical letter or by contacting your card issuer directly, it can take up to 150 days for the return to appear on your account. Be sure to alert your credit company as soon as you can because the investigation can take some time as well — 90 days, to be exact. 

Refunds on rewards

Any rewards you earn from a purchase will disappear if you return the purchase. 

This applies to all types of rewards earned through spending. Many reward programs require you to spend a certain amount of money in order to gain a base number of points or certain discounts. Returning a purchase ultimately means you aren’t reaching that threshold, so you don’t earn those benefits. 

Keep in mind that the terms surrounding rewards differ from card to card, but assume that you’ll lose your rewards when returning a purchase. 

How does a credit card refund affect your credit? 

A credit card refund is a good thing for your credit score. Ultimately, a refund means you are receiving money back, so your balance decreases, reducing the amount of credit you've used in the short term. Because credit utilization accounts for 30 percent of your score, staying below your pre-approved limit keeps your score in positive standing. 

As a precaution, experts recommend keeping your credit usage below 30 percent. If you happen to exceed 30 percent, a refund can certainly push you back below that and improve your score. Making an effort to frequently stay below your credit limit will undoubtedly benefit your score in the long term. 

Each year, you’re entitled to a free credit score report from any of the three major credit bureaus, Experian, Equifax, and TransUnion. It’s smart to take advantage of this to both preserve and boost your financial health to the best of your ability. 

Point's contributions

Most credit cards are terrific tools, allowing you to make purchases, borrow a sufficient amount of funds, and provide you with an array of perks while permitting you to return any item you aren't completely satisfied with. 

When it comes to flexible and broad credit card rewards programs, an excellent tool to consider is Point Card

You work hard for your money, and Point works hard for you in return. Specifically designed as an easy-to-use alternative payment card, Point cardmembers can exercise financial independence and spend their own money while receiving exclusive benefits. These include unlimited cash-back and bonus cash-back on subscriptions, food delivery, rideshare services, and coffee shop purchases. 

Furthermore, all users receive fraud protection with zero liability, no interest fees, plus car rental and phone insurance. Alongside a comprehensive benefits plan, no credit check is necessary to apply for the card. You’ll be able to have peace of mind knowing that Point is looking out for your financial well-being every step of the way as you strive to build your wealth, both now and in the future.

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Point Editorial
A group of writers, thinkers, & designers from varying backgrounds — all part of the Point Card team. Sharing perspectives on concepts in design, finance, and culture through an everyday lens.
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