TL:DR too long!
You’ve waited for the right moment, clicked submit. You bought something online it finally arrived a week later. You open the package only to realize you don’t love it: the shoes don’t fit! The perfume smells like a wet dog. Or worse, you must now confront the fact that those $200 jeans just aren’t your style. You package up the item, return it via USPS, and it takes another week to return. But worse still, you’ve been out of pocket now for three weeks, and it still takes some time for the funds to appear back on your credit card account. You’ve even been told the refund will appear on the next statement billing cycle. That means you still need to pay off the shoes you don’t want this bill, and hopefully the refund will appear next bill. That means next month. So now I’m out of pocket for like 45-60 days!
How long it takes for a refund to be issued, processed and posted will vary based on a number of factors. These include how quickly you initiate the return, shipping time, how fast the merchant processes the return and how long it takes your credit card company to post the credit to your account.
This is a lengthy, uncertain and painful process.
To understand how a refund actually works, you really need to understand how credit card payments are processed. When you make a purchase online using your credit card, the merchant requests payment from your credit card company. Your card issuer makes a payment on your behalf and adds that amount to your credit card balance, reducing your available credit line. In essence, they’re loaning you the money to buy the item online. This is why most merchants will only issue a refund to the card you used for the original purchase. In the payment industry they call this your original method of payment. The actual money part of your transaction happened with the credit card company and not you.
Any money that’s actually refunded to your account is treated as an account credit. It doesn’t technically count as a payment or partial payment. And worse, you won’t receive it as a separate payout. The credit card company won’t send you a check for the refund. It’s simply a credit on your account.
Let’s say you bought a $200 pair of sneakers with a 180-day return policy. Three months later, you decide you’re not even wearing the sneakers and the season has changed and you’re not going to wear the new kicks in the snow. It’s burning of whole in your wallet and your girlfriend is on your case about the need for more storage in your Manhattan apartment. For peace and harmony, you return it for a refund to your credit card:
- You’re responsible for payments that are due on the balance for the three months you own the sneakers.
- You’re also responsible for any payments that might be due while you’re waiting for the shoe company to issue a refund and for the credit card company to credit your account.
- You’ll still be liable for any interest charged against the $200 if you’ve carried a balance during the three months you owned the sneakers. This money will sadly not be refunded to you.
- If you scored any credit card rewards or frequent flyer points with your purchase, they’ll be reversed when the refund goes through.
If you aren’t already using a mobile app to check account activity, now is a great time to start. Welcome to 2023! For nothing else. you’ll be able to track your refund, view transactions and get notifications. Monitoring your account activity is an important part of managing your credit cards and key to staying current with your payments and understanding any interest payments.
Yours Truly,
The Instant Refund Expert™
The Refunds Blog 