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How Do Credit Card Refund Work?
Often, purchasing things with a credit card is convenient and has various benefits, such as cashback, rewards, and protection from fraud. However, sometimes you might want to return the product because it was defective, or you placed an order by mistake. Thankfully, with the credit card refund option, you can get your money back on time. Keep reading to know how!
Every time you pay with a credit card, the credit card companies authorise the transaction. Likewise, in case you would like to return an item, your card issuer will verify your request before making a refund. This credit card refund transaction does not come in the form of cash; it will be reflected on your credit card account.
The credit card refund process starts immediately once the credit card company approves your refund application. You can also use the return protection in case your credit card issuer is unable to refund the amount.
To understand the credit card refund process, it is essential to understand how a credit card transaction takes place.
When you decide to pay for your purchase via a credit card, the card-issuing financial institution makes the payment on your behalf. Then, the amount gets credited from the credit limit of your card after the transaction is approved. Next, you repay the amount to your credit card issuer in equal instalments, which gets added to your current credit card limit.
In the case of a credit card refund, the vendor notifies your card issuer of the refund initiation before crediting the amount when you make a refund request. As soon as your card issuer approves your request, the vendor initiates the refund process.
The credit card refund process generally takes up to three to ten business days before the refund is reflected on the credit card statement. The refund time varies depending on the lender and the credit card vendor’s policies.
A credit card refund is when a vendor refunds you directly to your credit card for the purchase you have made. A chargeback, on the other hand, is initiated by you through your credit card issuer to dispute a charge, typically due to issues like fraud or dissatisfaction with the product purchased by you.
Also Read - What is the Minimum CIBIL Score Required for a Credit Card?
Here are 7 tips for handling credit card refunds:
Also Read - Do's and Don'ts of Using a Credit Card
Credit cards are undoubtedly a great financial tool for purchasing something on credit. It has versatility and amazing benefits, such as rewards, cashback, fraud protection, etc. However, the process of refund can be a bit slower, unlike when making purchases. This happens due to the process of refund, which needs to be approved by both the vendor and issuer to reflect on your credit card statement. While handling your credit card refund, remember to follow the seven tips mentioned above to help you resolve refund-related issues quickly.
No, the credit card refund will not have a negative impact on the credit score. However, if you raise the refund and dispute multiple times it could raise a concern with your credit card issuer and might lead to an enquiry which can affect your credit score.
The rewards you have earned post the purchase of a product will be deducted from your account once the amount is refunded to your account.
The refunded amount to your credit card account will not be applied against the monthly bill amount, not even in part.
The credit card account statement will display a negative balance if there is no remaining balance.
Refunds on credit cards are just one of the various advantages that come with using credit cards. Not every aspect of credit card refunds is advantageous to you. For example, you might still have to pay interest and fees on the entire amount of your transaction, and you'll probably lose any rewards you've earned from the initial purchase.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.
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