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How refunds and returns work on a credit card

Returning a product you purchased on your credit card seems simple. After all, as long as you are within the retailer or store's return policy, you can typically return the item for a full refund. However, depending on the circumstances of your purchase and your return, the refund process on your credit card can involve some extra steps and factors. From understanding the impact to your reward point earnings to being responsible for foreign transaction fees on international purchases, here are a few things you should know about making a return on your credit card.

How do returns work on a credit card?

When returning a product to a store using a credit card, the retailer processes the transaction through your credit issuer. When you initially made the purchase, the retailer verified that your credit card details were up to date, checked to see if your card was active and then processed the payment from the credit card company.

Because of this, if you want to return an item, you will probably need to either accept store credit, or present the original credit card that you used during the initial purchase. Some retailers allow you to request a cash refund if you process a return transaction with a debit card, but you will not be able to do this with a credit card.

What if I made a return on a purchase made internationally?

If you were traveling internationally when you purchased and returned an item for a refund on your credit card, you may still incur a foreign transaction fee. Although it can vary depending on the credit card company, this fee typically is about 3 percent of the total amount purchased. With this in mind, you might want to contact your credit card company to learn its policies before you travel. For example, while many cards charge foreign transaction fees, some travel credit cards may waive them.

How long does it take for a refund to appear on a credit card?

Once you have returned the item to the retailer, you will receive a statement credit on your credit card account. This statement credit may show up on your online account within a few days, although the exact time frame will vary depending on both your credit card issuer and the merchant. It should also appear on your monthly statement within one or two billing cycles.

How does a refund show up on a credit card?

If you were carrying a balance on your credit card before your return, the return will likely appear as a credit on your account, and will reduce your total unpaid balance.

On the other hand, if you paid off your entire credit card balance before you made the return, the statement will appear on your credit card as a negative balance. This means that the credit issuer owes you this amount since you already paid for the balance. In this case, you can continue to use the card and have payments toward future purchases reduced by the credit. Or, alternately, you can also submit a request to your credit issuer if you'd like your credit returned to you in the form of a check or statement credit.

Will I lose my reward points if I make a return?

The reward points earned through the purchase will be deducted from your point earnings (which can include bonus points) once the transaction has posted to your account. If you had redeemed all your reward points before making the return, this will be reflected through a negative balance in your reward point accumulation in your online portal.

By being aware of how credit card returns work, you can better keep track of updates to your monthly statements and your credit reward earnings as well as become more informed of which credit cards to use internationally.