What Happens To My Credit Card Bill When I Make A Return?

Brendan Harkness

Brendan Harkness | Blog

Jun 27, 2016 | Updated Dec 06, 2017

Credit Card Returns Are Pretty Simple

Are you suffering from buyer’s remorse because of some recent purchases you’ve made? Do you want to know how to cure it? Drive back to the mall and return some things.

As long as you’ve complied with the retailer’s return policy, when you return the item the retailer will generally issue a refund equal to the cost of the original purchase, whether you paid with cash or credit.

Here’s the quick version of what happens with your credit card when you make a return:

  1. The retailer issues a refund to your credit card account
  2. A credit for the refunded purchase will appear on your credit card transactions, usually up to one week later
  3. Cash back or points earned on the purchase are reversed

Keep reading to learn more about the process of making returns on purchases made with credit cards.

Retailer won’t accept your purchase for a return? Check your credit card’s Guide to Benefits to see if you have Return Protectionwhich could get you your refund on eligible items.

Where Does The Money Actually Go?

When you buy something with a credit card, the retailer is actually starting the process of being paid by the credit card issuer, not by the consumer who is making the purchase. Normally, once the transaction is approved your amount of available credit is reduced, and you’ll be billed by the credit card company later.

At this point, whether you actually ever pay off your balance isn’t the retailer’s problem because they’ve already been paid. In the event that an item purchased with a credit card is returned, the retailer will issue a refund to your credit card account instead of issuing funds directly to you.

Remember, the merchant is actually paid by the credit card issuer during a credit card transaction and not by the consumer. This is why a consumer can’t receive a cash refund for a purchase that was originally made with a credit card.

Making A Return Right Away

A refund for a returned item will not usually post to your credit card account instantly.

Instead it generally takes several business days and potentially even up to a week before a refunded purchase will appear on your credit card ledger. Generally when a refund is processed for a returned item within the same credit card billing cycle, you won’t be held responsible to make a payment on that specific charge.

If you were to return a purchase near or after the end of your billing cycle, then the refund for the transaction might not show on your account before your next payment is due. Regardless of the timing of the purchase and the return, if you fail to make at least the minimum payment on your account prior to the due date then you could be penalized by your credit card company in the form of a late fee. You can’t skip making a minimum payment if there is any amount due to the card issuer.

Waiting To Make A Return

Consumers do not always return an item immediately or even within the same billing cycle. Sometimes it’s not even close. Months may pass between the date of the original purchase and the return of an item.

If there is a balance on your credit card when a refund for a purchase from a previous billing cycle is issued, then the credit will simply be applied to your account, reducing your existing credit card balance.

If your credit card has a zero balance when the return is processed, a credit is generally added to the account that can be applied to future purchases. If your card remains inactive with a negative balance for several months, the credit card issuer will likely send you a check for the credited funds on the account. You can also call your credit card company to request that a check for the account credit be mailed to you, thus eliminating the wait.

If you made a purchase then carry a balance into another statement period you may be charged interest. When you make a return, that interest will not be refunded.

Can’t find your issuer’s phone number? Check out our listing of “Backdoor” Issuer Phone Numbers.

Rewards, Cash Back, and Signup Bonuses Are Returned Too

It’s worth noting that when a purchase is returned and a refund is credited to your credit card account, any reward points or cash back you may have earned on the original purchase will be lost as well.

Credit card issuers have policies to deduct previously earned reward points or cash back credit from your account in the event that a refund is issued. Otherwise, if the policy were different, there would undoubtedly be a large number of consumers attempting to game the system by piling up reward points for large purchases, only to return the purchases at a future date and keep the rewards. This will not work.

Sign up bonuses, commonly found on travel credit cards, generally follow this same rule. If you received a signup bonus based on purchases that you later return, you’ll likely also lose the signup bonus. Read the card agreement of your card to determine exactly how rewards will be handled with returns.

Returns for Transactions in A Foreign Currency

If you bought something in a foreign currency, and then you return it, what happens?

This is another area that can be complicated, and depends on the card agreement of your card, since it can vary from one card or issuer to another.

Many credit cards charge a foreign transaction fee. If your card does, it’s possible you won’t get that fee back when you make a return. If you’re in this situation where a foreign transaction fee is not refunded, you may be able to get it refunded by calling your credit card issuer and asking for a refund.

If a significant amount of time has passed since you made the purchase, the foreign currency may have gone up or down in value. Credit card companies usually use the current market value of the currency to determine how much is refunded when you make a return. That means you may lose or make money if the foreign currency has gone down or up in value since the original purchase.

Additionally, like many commodity markets, there is a spread for buying and selling currencies. That means it costs slightly more to buy a unit of currency than you would get for selling it at a given point in time. So, even if you make the purchase then immediately return it and your card doesn’t charge a foreign transaction fee, you may lose money.

Have any other questions about credit card returns that weren’t answered here? Hit the Ask button at the top of the page and ask away!

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The responses below are not provided or commissioned by bank advertisers. Responses have not been reviewed, approved or otherwise endorsed by bank advertisers. It is not the bank advertisers' responsibility to ensure all posts and/or questions are answered.

  • bananaheim

    I have a question about credits. I have credits on my account that were for charges in August that are shown on my September monthly statement. The credits make up a substantial amount of the bill. I called the bank to have the amount due for the September statement lowered to account of the credits. I figured this is fair since the bank has been fully reimbursed for the charges because the bank had received the credit from the merchant.

    The bank told me that they would reduce the amount that was due for the September statement and that if I did not pay the full amount of the September statement (including the amount credited) I would be charge interest. Something seems very wrong about this. In essence, the bank is tell me that I will have to pay interest even though there is not longer a charge on the account.

    Has anyone else faced this situation? There should be a rule against this.

    • John Ganotis

      I don’t fully understand what you’re asking.

      1) When you say “credits on my account” are you talking about credits from returning items you previously purchased?

      2) When you say “amount of the bill” are you talking about your total balance (total credit card debt) on the card, or are you just talking about a minimum payment that is due by your next due date?

      • bananaheim

        Yes to question 1. For question 2, the “amount of the bill” I am referring to is the total balance on the statement, not just the minimum. Also, for the hypothetical below, assume that I am paying off my full balance every month.

        For example, I purchase an item on August 15 for $100. My September 1 statement shows that charge. If I pay the full statement (including the $100 charge) by September 30 I will not owe any interest on the $100 purchase. On September 15 I return the $100 item and the merchant provides a $100 credit to the credit card company and my account.

        In order to pay off the account in full on September 30 I believe that I should not have to pay the $100 charge since there is no longer a $100 debt. However, the bank is saying that I have to pay the charge as part of the September 30 statement (or they will charge me interest). Their explanation is that I will receive a credit against my October bill rather than the September bill.

        Since they have been reimbursed for the $100 charge, it seems that they are expecting me to make a $100 interest free loan to them, which doesn’t seem fair.

        I hope this makes sense. It seems simple in my head, but its hard to convey in writing for some reason.

        • John Ganotis

          It can vary from card to card, but really comes down to the terms of the cardholder agreement that you agree to when applying and later choosing to use the card.

          Based on my experience, most cards work this way: If the purchase and return credit happened in the same statement period, you wouldn’t be expected to pay for the purchase and it wouldn’t be included in the balance when the statement is generated. However, if the statement with the purchase has already been generated and a return credit is issued some time in a later statement period, the statement that was generated, with its balance, still stand. Any later adjustments get reflected in the following statement.

          • SNJ

            I have Chase. Within my billing cycle, I purchased and returned an item for $100 in October. Both the purchase and return (credit) show up on my billing statement for October. However, per Chase, I’m expected to pay the $100 (statement balance) for that statement, despite the credit already showing up on my billing statement. I’m told the $100 credit from that return (it’s already posted in October and shows up on my billing statement) will be given to me in November.

            Is this standard practice? I feel that I have bought and returned products within the same billing cycle before and never had to pay anything for them at the statement balance. Perhaps this is just for Chase?

          • John Ganotis

            I’m not sure what Chase’s standard practices are in regard to returns. It seems strange the statement balance would be $100 if the $100 purchase and $100 credit were both finalized before the statement closed. Perhaps the return was still pending when the statement closed?

      • Christian Avancena

        Will the transaction of your refund be shown on your account, or will it just take away the fact you ever purchased that item?

        • John Ganotis

          Usually the original transaction will still be there and you’ll see the refund as a separate item.

  • jdub

    Hello, I had a zero balance on my credit card. I made a purchase 10 days ago. 5 days ago I paid the balance off in full. today I returned the item. Having already paid the balance off….where does the refund go?

    • John Ganotis

      As this article says, “a credit is generally added to the account that can be applied to future purchases. If your card remains inactive with a negative balance for several months, the credit card issuer will likely send you a check for the credited funds on the account. You can also call your credit card company to request that a check for the account credit be mailed to you, thus eliminating the wait.”

  • nicholas steele

    Hello, I recently had a reoccurring payment process with my credit card company, it was my yearly Amazon Prime account, (Discover) and I already payed my monthly statement (I use their autopay).

    I noticed this, since my credit score dropped for some reason, and requested them to change my payment from yearly to the monthly, and in doing so, they refunded me the funds from the yearly payment and charged me for the monthly payment price.

    I understand that the refund will go back onto my card (not as a payment), but my question is; Will that refund make my credit score return BACK to what it was previously, after the next statement? Or is it already affected and I will have to rebuild the score?

    Thank you!

    • John Ganotis

      Credit scoring models are complex and proprietary. I don’t have any way of knowing exactly what any of your credit scores will do if there is a refund on one of your credit cards. As long as you’re keeping utilization low and paying all your bills on time your credit should stay in pretty good shape. To learn more about building credit with credit cards read this: https://www.creditcardinsider.com/learn/definitive-guide-how-to-build-credit-with-credit-cards/

  • charlie nufuar

    hi I would like to ask if the customer requested for refund back to their credit card but that card is no longer available however the credit card company provided her new card. how this refund works since the original card is no longer valid? please answer.thanks

    • John Ganotis

      In that case the credit card issuer may credit the new account. The best way to find out would be to contact the credit card issuer.

  • abhimanyu

    hi, i have one question – will the refund affect the current due Amount (out of which the initial transaction happened for which refund is coming back, after return) ?

    • John Ganotis

      It’s likely the return will be reflected on your next statement. You may need to pay the full statement balance by the due date to avoid interest, or at least the minimum due that was on your statement by the statement due date to keep your account in good standing.

      • abhimanyu

        but why should i pay for the thing which i returned already. the refund should be deducted from the due amount statement right?
        (i am sorry, i am just a newbie who got his 1st credit card)

        • John Ganotis

          Because you paid for it one statement period and returned it the next, it’s activity in the next statement period. If this all happened in one statement period then that would probably be reflected in the balance that’s due. It also depends on the terms you agreed to for your specific card when you applied. Generally if a statement period is closed and you have a refund in the next statement period it will be reflected on your next statement and doesn’t affect the statement period that has already closed.

          • abhimanyu

            my current statement period is active for 20 days, that means refund will be settled in that (if it comes before closing) and i will pay-n-avoid any bad reputation. (understood somewhat now)
            thanks Mr Ganotis, appreciate your responses.

          • John Ganotis

            To make sure you understand your statement and the amount you should pay read this post: https://www.creditcardinsider.com/blog/how-much-should-i-pay-on-credit-card-bill/

  • BEY

    I want to thank Cyberintelligent13 at gmail dot com for the tremendous results I received from your services. My credit score has improved by over 100 points. My credit profile is the best I’ve ever had. I will refer your services to anyone I know who has any hesitation, as I did, approaching and demanding fair reporting to credit bureaus.

    With your help I have been pre-approved for a home loan recently. Thank you once again for the help.

    Sincerely, BEY

  • Lenore Garnhum

    If I return something with a receipt that was paid on a credit card and now the credit card has a zero balance, can I just get a store credit for a future purchase? Thanks!

    • John Ganotis

      You could ask the store when you make the return — it’s up to the store and their policies. A common thing for stores to do is refund the payment method that was used, so if they did that you’d just end up with a credit balance on your credit card.

  • Farkhod Karimov

    Hi. Please can you explain my situation. 2-3 days ago I went to auto repair shop to make inspection for my car. Owner told me the price around $1500. I gave him my credit card he swiped it and I signed in receipt. Next day he texted me that he had problem with my credit card. When I came to his place he explained that he accidentally press return button on cashier machine device and he gave me money instead I did. Then he charged me around $3000 to take his money back and for inspection services which is around $1500. I am checking my account every day and don’t see any refund from him. Is it everything ok? Is it possible first return to my credit card then charge it 2times more? Is it everything legal? Or he is cheating me with that my case? Thank you in advance. I really need your help and answer.

    • John Ganotis

      It can take a week or more for a return to show up, so it’s possible if he actually did refund you $1500 in the first place that it isn’t showing up on your account yet, but also you wouldn’t see a $1500 charge from that first transaction if he actually was refunding you. So at this point I’d expect to see a one $1500 charge from him on your account, unless he’s cheating you.

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