It only takes a few seconds for the average credit card transaction to process. If you’re paying by cash, the time it takes for money to exchange hands is even faster.
But getting money back? Ah, that’s another matter.
When you make a purchase with a credit card, you make a promise to your card issuer that you will pay the money back. Think of it as a loan for the amount you paid. Usually, you pay off your credit card balance at the end of the month. Does that mean the merchant you bought from gets paid when you pay off your balance? No.
When you buy something on credit, the retailer will be paid quickly by your credit card company. If you end up returning the item you purchased, the funds will be refunded directly to your credit card account, not to you. This will leave a balance on your credit card account for the amount of your purchase. Because you made your purchase using credit, you typically can’t receive your refund in the form of cash.
A recent study found that online merchants take their time – days, and sometimes weeks — to refund your money. The study, conducted during the holidays by StellaService, found that dot-coms like Amazon.com, BestBuy.com, and LLBean.com typically refunded a purchase within about four days. Dell.com, on the other hand, took two weeks and one business, Avon.com, didn’t return the money at all by the time the research was published in late December.
I’ve always wondered how businesses can get away with that: Take the money quickly and return it slowly. Or never. Oh yeah, that happens more often than you’d think, which is why I have a job as a consumer advocate.
The short answer is, because they can. There are few, if any, laws that require a prompt refund to be issued when merchandise is returned. Some stores will insist on giving you credit instead of returning your money, which only benefits them. Store credit can go unredeemed, particularly when you’re so upset that you vow to never darken the door of the business again. There’s only one winner in that game, and it isn’t you.
In other words, merchants return our money slowly because we let them, but we shouldn’t.
Here we discuss how a refund on a credit card works and provide a few secrets to getting a speedy refund.
- Credit card refunds are issued back to your credit card account—you typically can’t receive your refund in other forms of payment such as cash.
- Refunds on credit card purchases usually take 7 days.
- Credit card refund times vary by merchant and bank, with some taking a few days and others taking a few months.
- You can get a faster credit card refund by asking for your refund as soon as possible, submitting your request in writing and getting a receipt, knowing the code, learning the rules, and being persistent.
- Billing disputes and fraud disputes impact credit card refund times and can take up to six months.
- If you use a reward to make a purchase, you won’t get it back when you return your product or service. The same goes for international travel fees.
How Credit Card Refunds Work
How does a refund on a credit card work? This is an age-old question that consumers have been asking since credit cards became commonplace decades ago. When you buy from a retailer using a credit card, whether it’s a student credit card, unsecured credit card, or secured credit card, your credit card company pays the retailer. Once your credit card company approves the transaction, your credit limit will be reduced and the amount will be displayed on your credit card bill, usually at the end of the month.
But what if you bought the wrong item or simply had buyer’s remorse? Credit card returns happen every day, but consumers may not know how the funds get reimbursed. Because your card issuer paid for the item(s) you bought, your funds will be refunded back to your credit card account. This is because you didn’t pay the merchant directly. It’s also the reason why you can’t receive cash or other forms of payment on refunds on credit card purchases.
For example, let’s say you go shopping on Black Friday and bought a brand-new TV for $300 using your credit card. You realize the TV is too big to fit on your mantle, so you go back to the store and return it. When you make the return, the retailer will usually ask for your receipt and the card you used to make your purchase. When the transaction is complete, the refund balance will be posted to your account.
To get a refund on a product or service purchased with a credit card, ConsumerFinance.gov suggests you simply start by reaching out to the company you bought from and explaining your issue. However, if you’re not satisfied with how the company handled your refund, you can dispute the charge with your credit card company.
How Long Does a Credit Card Refund Take?
The most pressing question consumers ask themselves when they make a return is, “how long does a refund take?” It typically takes about 7 days for a credit card refund to be processed. However, credit card refund times vary, with some retailers issuing a refund the same day if you return in person, while others may take a few weeks or even months to issue the amount back to your account.
The time it takes to receive a credit card refund also depends on a few other factors, such as the retailer, the method you used to return the item (online, in-person, etc.), and your credit card issuer’s policies.
Credit Card Refund Times Vary by Merchant
Wondering how long it takes to process a refund? Take a look at the credit card refund times for some of America’s most popular stores:
- Amazon: The online retail giant’s refund policy says that it can take up to 25 days for a returned item to reach its fulfillment center. Once the item is received, it takes 2 days for the credit card refund to be processed, and 3-5 days for the refund amount to show up in your account.
- Forever 21: This popular clothing chain’s refund policy asks you to allow 2-3 weeks from your returned shipping date for your account to be credited, and 1-2 billing cycles for the credit card refund to appear on your statement.
- Macy’s: This famous department store’s refund policy states that credit card refunds will be processed immediately if returned in-store. However, depending on your bank, it may take a few days for your refund amount to reflect in your account.
- Adidas: If you purchase and return anything from Adidas, they will reimburse you from the day they receive a confirmation that your item was handed over to a carrier. From there, it will take 3-5 days to ship to their warehouse. However, the time it takes to receive your credit card refund depends on your bank, which can take up to 30 days.
- Walmart: Credit card refunds from the world’s largest department store chain will take up to 5 business days.
- Square: If you purchase an item from a store that uses Square and make a return, it will take 2-7 days to process a refund and another 2-7 business days for the refund to be posted to your credit card account.
Refunds on Rewards and Fees
When you shop at a store, you may receive exclusive perks, such as reward points. For example, let’s say you earn $15 off your next purchase after spending $150. You go to the store a few months later, buy a pair of $90 shoes, and use your $15 in rewards, bringing your total to $75.
But what happens to that $15 in rewards if you decide to return your shoes? Unfortunately, your $15 reward won’t be returned to you because that money came from the merchant, not you. The same goes for cashback incentives and signup bonuses as well.
Another issue with credit card refunds is foreign transaction fees. When you travel abroad, some banks may charge a fee because it costs them money when you shop abroad. If you end up returning a product bought overseas, your card issuer might not return the fee. However, there’s no harm in calling and asking for a refund if you happen to be in this situation.
Billing Disputes and Fraud Disputes Impact Credit Card Refund Times
Sometimes, mistakes happen and an error may pop up on your credit card. Maybe you got charged twice for one product, or perhaps you got charged for a product or service you never received. If this happens, you can dispute your bill to get your money back. Unfortunately, the process can be a bit of a headache and take up to six months for your refund to be processed.
The Fair Credit Billing Act protects consumers who are victims of fraud or have errors on their credit card statement. Notable takeaways from this bill include:
- Consumers must send a dispute letter within sixty days after they received a bill with an error
- The credit card issuer must respond to your dispute letter within thirty days
- The dispute must be resolved within two billing cycles, not over ninety days, after receiving your complaint
Tips to Get a Faster Credit Card Refund
When you make a return, it’s only normal to want to get your refund as soon as possible. After all, it’s your money, so why should the retailer get to take their time giving it back to you? Whether you made a regretful purchase and need the money back as soon as possible to keep your credit health in check or you received the wrong item, here’s how you can get a faster credit card refund.
Normally, a merchant will refund your purchase via the payment method you used. In other words, if you paid by credit card, you’ll be refunded by credit card. But that may not be the fastest way to your refund (indeed, it’s not unusual to have to wait two to three credit card billing cycles for your money). See if they can refund the purchase in cash or by another method, like PayPal.
2. Submit Your Request in Writing and Get a Receipt
I’m always on my soapbox about the importance of paperwork, but it’s never more critical than in this situation. Get everything in writing, because if the money doesn’t come through, that email or receipt can be successfully used in a credit-card dispute. The correspondence can also be used as a friendly reminder, forwarded to a manager, informing them that you’re still waiting for the refund to go through.
3. Know the Code
True story: When I worked in corporate America many years ago, I was in charge of approving invoices for my department. Some of my more sophisticated contractors would write “Net 30” on their invoices. That tells the accounting department to expedite the payment and take care of it within 30 days of receipt. I’ve seen businesses take as long as 90 days to process a refund. Warning: don’t write something random on a refund request, hoping it will make your money come back faster. Make sure you get the code from an employee; otherwise, it will just confuse the accounts-payable folks.
4. Learn the Rules
Some businesses have refund policies that may, or may not, be followed when you ask for your money back. Likewise, there are laws (precious few, as I’ve already mentioned) that might benefit you. For example, the Department of Transportation requires airlines to refund a ticket within a week when you pay by credit card. Businesses assume you won’t pay attention to these rules and will patiently wait with the rest of their customers.
5. Be Persistent
You shouldn’t have to pester a company for a refund, but the sad fact is that a lot of corporations turn their refund delays into a business. That’s right, they treat your money like a short-term loan and take their sweet time sending your hard-earned cashback to you. No, they’d never admit it, but ask yourself: Whom is the delay helping: You or the company? That’s right, it’s definitely not you. The only way to make sure your money isn’t turned into an interest-free loan is to demand it back at regular intervals when it doesn’t show up in your account.
I hate to break it to you, but when it comes to refunds, businesses would really rather take the product back and keep your money. But they can’t have it both ways. You’re entitled to a speedy refund, and these simple strategies will help you get it.
Consumerfinance.gov; How can I get a refund on a product or service I purchased with my credit card? | Finder.com; What happens when you get a credit card refund? | Consumer.ftc.gov; Disputing credit card charges | Appriss; National Retail Federation; Consumer Returns in the Retail Industry
Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions by email.