You have just bought a brand-new gadget with your Credit Card, are excited about its features and how it will fit into your life. However, after a few days, you realise it is not what you expected. Frustrated but hopeful, you decide to return it and get your money back. But how does Credit Card refund work?
What is a Credit Card refund?
Suppose you buy a product from a merchant and pay through a Credit Card. However, you dislike the product and return the same. In that case, the merchant will issue a refund for the payment you made through a Credit Card. This is known as a Credit Card refund.
How long does a Credit Card refund take?
Credit Card refunds time is usually between 5 to 14 days to appear on your Credit Card statement. This is because the transaction is processed through a credit card processing service. The exact Credit Card refund time limit can vary according to the card issuer and intermediaries involved.
Another important factor is the shipping. If you return the product to your merchant directly at the shop, then the merchant can raise the refund request forthwith. In other cases, if you ship your product to the merchant, then you will have to account for the shipping time as well. You can know the accurate timing of the refund by directly checking it on the merchant’s website.
Some merchants may provide you with a refund in alternate ways. This includes store credits whereby you can purchase another item from the same store in place of the product refund. Other ways involve refunding through cash. This works in the case of offline purchases. In either of the above ways, you will still have to pay your credit card bill.
How is a Credit Card refund processed?
Once you pay any merchant through a Credit Card, the payment is made by the bank. The bank then issues the Credit Card statement and collects the dues from you. However, when you return the product, the merchant issues a refund. A credit gets initiated to your Credit Card account. The refund amount is deducted from your outstanding balance, and your available credit limit is increased by the same amount. The Credit Card negative balance refund will be reflected in your statement and adjusted accordingly.
How are refunds issued?
To initiate the process of Credit Card refund after payment, the customer needs to contact the merchant. You need to go through the merchant's return and refund policy. After the merchant initiates the refund, it may take around 5-10 business days for it to be reflected in your Credit Card statement.
Tips for handling Credit Card statements?
Following are the effective tips for handling the Credit Card statements:
- Keep receipts and documentation: You should keep the receipts, bills and documentation relating to your purchase, as they will be required while initiating the Credit Card refund process.
- Check your account after your refund query: After the refund is applied, you should check your account statement to check whether the refund is initiated and processed correctly or not.
- Contact your issuer: If you don’t receive the refund within a reasonable time, you should contact your Credit Card company or the merchant.
The difference between a refund and a chargeback
Many people get confused between Credit Card refunds and chargebacks. Refunds are initiated by the merchants after you return the product or service that you bought. Chargeback is initiated by your Credit Card company after you file a billing dispute for a purchase that you never received or the item was different from what was ordered.
Difference between Credit Card vs Debit Card refunds
If you make a purchase through a Debit Card and return the same, the refund amount directly gets credited to the bank account with which the Debit Card is linked. In the case of a Credit Card, the amount is adjusted against the outstanding account balance of the Credit Card.
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Also Read: 5 quick ways to check Credit Card balance
FAQs
Q: Can I transfer the Credit Card refund to my bank account?
A: You cannot transfer the Credit Card refund to your bank account. It will be added to your credit limit.
Q: How long does it take for a refund to process on a Credit Card?
A: A Credit Card refund time is usually 3-7 working days. If it does not happen, you should contact the merchant or Credit Card company.
Q: Why is my refund not showing up on my credit card?
A: There might be an error or delay in processing your Credit Card company. You should contact your merchant or Credit Card company.
Q: Do credit card refunds affect your credit score?
A: Credit Card refund does not impact your credit score. However, if the refund reduces your utilisation ratio significantly, it can increase your credit score.
Q: Why is my refund not showing up on my Credit Card?
Credit Card Refund process might take anywhere from a few days to several weeks to show up on your Credit Card. It depends on how quickly the merchant and your bank process them. Delays in Credit Card refund can also arise from banking errors or identity verification concerns. For detailed information and help, reach out to your card issuer.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
