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It's also often the required payment method of many online retailers and a way to help boost your credit and overall personal finance.
If you have to return the purchase, if it arrives damaged or takes longer than the promised shipping time, how do you get your money back? Well, the money can be refunded to your credit card.
Depending on if you purchase with your credit card online or in person will determine how the refund will need to be processed. In some cases, you may need to present your physical card, while in other cases, it can be done remotely. It will also have to be returned to the same card the item was purchased with. In either instance, how long does a credit card refund take?
How Credit Card Refunds Work
How a credit card refund works is pretty simple, actually. When a purchase is made, and the money needs to be returned, it's processed to go back to the method of payment the item or service was purchased with. If the item was purchased just using the credit card number, then the money can be refunded without a physical card.
If you used the physical card at a terminal, then more than likely, that's how the money would need to be returned. The ability to refund ultimately depends on the rules of the company, the credit card refund policies and the processing system they use.
How Long for Credit Card Refunds to Appear
The amount of time it takes to process a credit card refund depends on the financial institution with which you have the credit card. It can also depend on the processing system and merchant used to process the refund. That said, while most credit card refunds process in around 4 to 5 days; it can take anywhere from 2 to 90 days to see the refund on your balance and your credit card bill.
Pinpointing the exact amount of time with each Canadian institution is difficult because it's not the only factor in determining the time it'll take to process.
Refunds to Cancelled Cards
When a credit card refund is processed to the original method of payment, and the card is expired, the financial institution that you have the card with will redirect the refund to the new credit card account. The money will be sent to the customer's bank account if there is no credit card account.
If the institution that your credit card was held with doesn't have your bank account information, the money will be returned to them, and they will contact you to find the best way to return it to you.
Refunds to Cards with No Balance Owing
What happens if the money is returned to you, but you have a zero balance on your credit card? Well, you'll have a negative balance in a case like that. In the case of a credit card, though, a negative balance is a good thing.
A negative credit balance now means the credit card company owes you money. It's also referred to as account credit. If they owe you money, then any future credit card purchases will be taken off that negative credit balance. If you cancel your credit card with a negative credit balance, the credit card company will return the money to you.
Even if you don't cancel the credit card but the negative credit card balance sits on there for an extended period, or it's a large negative balance, they'll likely just return the money to you. Depending on the financial institution, it could be returned to you through your bank account or via cheque.
Refunds to Debit Cards
Refunding your funds to a debit card instead of a credit card works a little differently. A credit card refund takes an extended period to process; however, a debit card can sometimes be credited immediately, just like it can process purchases instantly.
That said, while some companies can offer refunds instantly, the majority of the time, a refund will take anywhere from 2 to 5 days to appear. It can take up to 30 days to appear in some rare cases. Even then, it's still a much faster processing time than credit cards. Either way, though, the fastest way to receive a refund is in person, at the merchant.
Refunds to Visa Debit Cards
Due to the fact that Visa Debit Cards are used in a credit card capacity for online purchases only, their refund processing times are similar to that of a traditional credit card. While the average refund timeline is normally between 3 and 5 business days, it can take 2 to 24 business days to have your refund on your bank account balance.
How long it takes for you to see a bank account refund ultimately depends on the processor that is used by the merchant. However, it's also influenced by how long it takes the bank to post the transaction.
What to do If your Refund Isn't Received
If you had a credit card refund processed but haven't received it, the first step is to contact the merchant. They'll be able to look at their records and check with the processing company to see what happened to the funds and figure out a way they can be returned to you.
Once you receive your refund, it'll appear as an account transaction. It will show up as a credit, and you'll be able to see that refund amount come off of your total credit balance.
Refund not Showing up on Your Credit Card Statement or Balance
Normal credit card refunds can take a few days to process. Because of this, it may not show up on your statement on your balance because it didn't make the cut-off for your billing cycle. That said, you should be able to see it on your available credit balance and transaction history online. Keep in mind that while you can usually see the refund after about a week, it can take up to 90 days before it shows up on your statement.
If, after 90 days, the refund does not appear, that's when you should start looking into it. You can contact the merchant to verify the transaction went through. Another option is to contact your credit card company. They'll also be able to look into the refund and verify if the charges were processed correctly or disputed.
How to get Cash from a Credit Card Refund
With most credit card companies, there's no way to receive cash from credit card refunds. The refund is returned to the original payment method. This is done for security reasons and to verify that the person who made the purchase then receives the refund.
You can only cash out a credit card refund if it's been returned to a cancelled card and there is no other account to add it to. The credit card company will contact you to make sure you receive the payment. This, however, can be a lengthy process, but you will receive the funds back.
The only other way you'd be able to receive the cash is to take out a cash advance. You can do this by taking out money at the ATM. How much you can take out depends on your credit limit. These purchases can cost more, though and affect your credit utilization ratio.
Refund Showing up As a Charge
Once a refund has been processed, you'll notice it shows up under pending transactions before the refund posts to your account. While this may look like a credit card charge, it's a pending refund. Once the pending stage is complete, you'll notice that the credit is added to the account and taken off your account balance.
While the pending transaction may look like a charge, when you open it up, you'll be able to see the details of the transaction. It will show where the transaction was made and when. Depending on your credit card company, it still might not show that it's a refund until it's posted to your statement.
Why do Credit Card Refunds take so Long?
The main reason that credit card refunds take so long is that they aren't processed directly to your account. While the refund is processed immediately, all refunds go directly to the credit card issuer. From there, the issuer then transfers the money to your credit card account. This process can take a few days, so these transactions aren't instantaneous.
Fees Associated with Refunds
While there are no fees when you get a credit card refund processed, you may not get those extra charges back if your purchase was in a foreign currency.
When you purchase an item in a foreign currency or make an international transaction, many credit card companies charge foreign transaction fees along with the currency exchange rate. When you receive the refund, they keep these extra charges. You'll just receive the original purchase amount of your purchased product.
Why You Can't Receive a Refund
With most purchases, credit card or not, you're able to receive a refund. That said, on some purchases, you may not be able to. It all depends on their refund policy. Some refund policies allow for refunds, while others will only provide store credit for future purchases. This is more common for in-person purchases than online purchases and can usually be found on the fine print of your receipt.
In some cases, the merchant refuses to have the money refunded. There can be a multitude of reasons for this. Receiving store credit might be the best-case scenario in this situation.
You may also want to request a store credit, especially if only a partial payment was made with your card and the rest was made with cash. However, you can still receive a refund of the same amount on the same card, and get the rest as cash or store credit.
Final Thoughts
When you're making in-store and online purchases, there are plenty of reasons why using a credit card is a good idea. There are often extra protections included with credit cards, and your funds are insured. This can make not only purchases easier but also refunds.
When it comes to refunds, they have to be made with the original method of payment. If you purchase online, then your funds will go directly to your credit card. While processing can take a few days, you usually see these relatively quickly.
In the event that the card no longer exists, you'll receive the funds directly from the credit card provider. That money has to be returned to you either way. If you don't receive it, the issuer can look into that for you. Either way, card refunds are relatively easy. Online purchases don't require showing your card when receiving your money back.
This method of receiving a refund is relatively safe and efficient. You'll usually receive your money back in just a few days without any stress.
