How Do Credit Card Refunds Work?

Earning credit card points while taking care of your everyday spending needs is valuable. You can exchange your earned points for cash back, statement credit, and travel purchases. As you continue to spend with your credit card, you'll accumulate more points. Sometimes, though, it's necessary to return a previous purchase that you've made. Have you ever wondered what happens to your points when you return a purchase? Keep reading to find out.

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Here's how you'll receive a refund when you make a return
Beware: You could lose points
Still have questions?

Here's how you'll receive a refund when you make a return

You may be wondering how you'll get a refund when you make a return with a credit card. The money will be credited back to the credit card you used to make the purchase.

Here's how a refund will impact your credit card balance:

If you have a balance: The money owed will be credited. This will reduce your total unpaid card balance.
If your current balance is zero: Your updated balance will show as a negative after making the return. As you charge other purchases, your balance will change. If you don't plan to make more purchases soon, you may be able to ask your credit card issuer for a check. Otherwise, the negative balance will remain until you charge purchases higher than the return amount.

It's worth noting that it may take a few days to see the return on your card because returns take time to process. When you make the return, you can ask for a receipt for your records.

Beware: You could lose points

When you buy an item with your credit card and then decide that you no longer want it, you may choose to return the item to the store. Your credit card will then be credited the amount of money spent for the return. Did you earn points on that original purchase? If so, the credit card issuer will likely take your points back.

How points disappear after a return

The credit card company will subtract the points from your total rewards points. The time frame for this can vary. This might happen right away once the store refund hits, or it might happen later when you get your next credit card statement.

Keep this in mind as you do your regular shopping and when making returns. Otherwise you may be confused if your points total doesn't add up to what you thought it would be. If the number seems off, you may have recently made a return for a previous purchase that earned points.

How to avoid losing points when making a return

If you want to make sure that your points balance doesn't change, you have another option. When making a return, see if the store will offer store credit. Instead of refunding your money directly to your credit card, some stores will give you store credit in the form of a gift card. This is an excellent option because you get to use the money from your previous purchase for future purchases, and you keep the original points you earned.

As you look at top credit card options and begin planning your spending goals, keep this information in mind. Don't be afraid to make store returns when necessary, but if you want to keep the points you've already earned, consider asking for store credit instead.

Still have questions?

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