Credit Card Refund: Beginners Guide to a Better Shopping Experience

If you have ever gone shopping (which should be most of us), you may have heard the following or some variation of it from a cashier:

Just so you know, you have 14 days to return the item. Please make sure to keep the receipt and its original packaging.

We usually keep this message in the back of our heads on the off chance that we may need to return the item we bought in-store or online. However, flash forward a few days later, and you make the wrong purchase. It’s time to initiate a refund.

If you paid for the product with a credit card, you must understand what getting a credit card refund looks like and when you might use one. This article will guide you through how to receive compensation. Let’s begin!

What Is a Credit Card Refund?

A credit card refund happens when you return a product you purchased using a credit card and receive a credit to your account. Credit cards, as a whole, can be complex.

As most of us use it daily, it is easy to begin thinking that the money belongs to us when in fact, we are essentially borrowing money from our credit card issuer for a certain amount and repaying that back at the end of our credit card statement. So, when it comes to a credit card purchase and refund, the merchant is paid directly by the credit card issuer – not you.

By that same logic, if a merchant honours their refund policy, the refund comes back directly to your credit card account. That is why, in many cases, merchants won’t give a cash refund for a purchase made with a credit card.

Interchange fees and your credit cards - Credit Card 1730085 1280

How Long Does a Credit Card Refund Take?

Processing a credit card refund depends on several factors including:

the return method,
merchant refund policy,
the credit card issuer etc.

For example, an online store return may take much longer to process: you have to mail the item back to the merchant which could cause delays between, you, shipping the item, and them, receiving it. Only once they have received the item do they begin initiating a refund to you whereas going in person gives you a much better chance to receive your refund earlier.

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Credit card refunds can take several days to be processed; some may take longer than others. While every company is different, around 2 to 14 days is a good bet, but you shouldn’t be surprised if it takes longer.

Will a Credit Card Refund Affect My Credit?

Under certain circumstances, it is possible to have a credit card refund affect your credit score both positively and negatively. For instance, one factor in determining your credit score is known as the utilization ratio, the amount of credit you use compared to the amount you have available.

Though this number varies, many experts agree that having it in between 15-30% will help your chances of improving your score. Therefore, if you receive a credit card refund before your credit card statement that reduces your utilization ratio below that threshold, you could see a positive effect on your credit score.

The same can be said of the reverse situation, however. As we mentioned, credit card refunds can take some time. If you do not receive a refund before your credit card statement and carry your balance over the 15-30% threshold, you may get a ding on your credit score. Not to mention the additional interest accrued as a result of a balance.

What Is a Chargeback on a Credit Card?

In our previous article on credit card authorization forms, we briefly touched on chargebacks, which involve disputing a charge with your credit card company. They are usually filed when the merchant may not have honoured their terms and conditions in an agreement with you by charging you an extra payment or more severe offences like identity fraud.

The main difference between the two is that a chargeback deals directly with the credit card issuer to correct a billing error on your account. On the other hand, a credit card refund deals with the merchant directly in cases where you need to get your money back over issues like product deficiency, cancellations, etc.

Credit card refunds can take several days to be processed; some may take longer than others. While every company is different, around 2 to 14 business days is a good bet, but you shouldn’t be surprised if it takes longer.

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American Express Cobalt^® Card

American Express Amex Membership Rewards

Annual fee: $191.88
Our valuationMilesopedia first-year estimate First-year valueWelcome bonus$255Total$255Rewards on your spending are not included. The calculator that adds them from your own profile is on the card's page.: $255
Welcome offerGet 1,250 points after $750 in purchases per month for 12 months: Up to 15,000 points

The American Express Cobalt^® Card is a versatile American Express card, whether you want points for travel or cash back.

American Express Cobalt^® Card welcome offer

The welcome bonus is paid out monthly over your first 12 months. You earn 1,250 Membership Rewards points for each monthly billing period in which you charge $750 in net purchases to your card, in any category (1X, 2X, 3X or 5X). That adds up to 15,000 Membership Rewards points over the year, a welcome offer valued at $255.

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You can use these points as statement credits on everyday or travel purchases, at the same rate either way: 1,000 points = $10.

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15,000 Aeroplan points
15,000 Avios points
15,000 Flying Blue Miles
18,000 Marriott Bonvoy points

American Express Cobalt^® Card benefits

Here is what the card gives you, starting with the benefits cardholders use most.

5X points on eligible eats and drinks in Canada: groceries, restaurants and bars, home food delivery and convenience stores. A spend cap applies.
3X points on eligible streaming subscriptions in Canada.
2X points on eligible gas, public transit and ride sharing purchases in Canada.
1 additional point on eligible hotel and car rental bookings made through American Express Travel Online.
1X point per dollar on everything else, with no category restrictions.
Points that hold the same value either way: 1,000 points = $10 as a statement credit, or a 1:1 transfer to several airline and hotel loyalty programs.
No minimum income requirement, as with every American Express Canada card.
Additional cards at no extra cost: the first and every other supplementary card is $0.
The Hotel Collection: a room upgrade when available, 12pm check-in and late check-out when available, and up to $100 USD in hotel credit on amenities charged to the room for a stay of two or more consecutive nights, booked through American Express Travel.
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The 5X categories and where they apply

The 5X rate is the reason most people carry this card. In Canada it covers four kinds of merchants:

Groceries: Metro, IGA, Sobeys, Super C, Safeway, Whole Foods.
Restaurants and bars: sit-down meals, takeout and drinks.
Home food delivery.
Convenience stores: Couche-Tard, 7-Eleven.

The 2X rate covers gas stations such as Esso, Shell and Petro-Canada, along with public transit and ride sharing.

With the American Express Cobalt^® Card, you earn between 1 and 5 points per dollar:

Category	Points per dollar
Grocery (Metro, IGA, Sobeys, Super C, etc.)	5
Home food delivery	5
Restaurants and bars	5
Convenience stores	5
Streaming services	3
Service station	2
Transport	2
Travel	1
Other	1

That works out to a 1 to 5% return on those purchases. For example, if you spend $1,000 per month across groceries, restaurants and food delivery, you earn $50 back per month, or $600 per year from that category alone. Transfer the points to a program such as Aeroplan instead and the return can be higher.

You can also stack these categories with the hundreds of stores that offer 5x points.

American Express Cobalt^® Card insurance coverage

The card comes with a broad insurance package. The amounts below are the coverage limits; conditions, age limits and exclusions are set out in the certificate of insurance linked in the Insurance section above.

Travel insurance

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Travel accident: accidental death and dismemberment of up to $250,000 for you, your spouse and dependent children under age 23 when travelling on a common carrier (plane, train, bus or ship) and the tickets are charged to your card. Supplementary cardholders and their families are covered too.
Flight delay: up to $500 for necessary hotel, meal and sundry expenses bought within 48 hours when you are delayed or denied boarding for four hours or more and no other transportation is available. This $500 is an aggregate limit per occurrence, shared with missed connection and delayed baggage coverage.
Delayed baggage: up to $500 for essential clothing and sundries bought within four days when your outbound luggage is delayed six hours or more. This $500 is an aggregate limit per occurrence, shared with missed connection and flight delay coverage.
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Rental car insurance

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Mobile device insurance

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Purchase protection and extended warranty

Eligible items charged to your card are insured against accidental physical damage or theft for 90 days from the purchase date, up to $1,000 per occurrence for all items combined. The card also extends the original manufacturer’s warranty by up to one additional year on eligible items, with indemnification limited to $10,000 per insured item and $25,000 per Cardmember per policy year for all items combined.

American Express Cobalt^® Card fees

Card fee: $15.99 per month, which equals $191.88 per year, for residents outside Quebec. Quebec residents are billed $191.88 per year.
Additional cards: $0.
Purchase interest rate: 21.99%.
Cash advance interest rate: 21.99%.
Foreign transaction fee: 2.5%.
Minimum income required: none.

Because the fee is billed monthly rather than in one annual charge, you can stop and restart the cost in step with how much you are actually using the card.

Legal

American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information, click the Apply Now link. If you apply and get approved for an American Express Card, we may receive compensation from American Express, which can be in the form of monetary payment.

Annual fee

Primary card$191.88

Additional card$0

Annual income required

Individual$0

Household$0

Conversion fees

2.5%

Earning rate

5xRestaurants
5xGroceries
3xStreaming
2xTransit
2xGas & EV
1xAll spending

Value

1st Year Value$1,675

2nd Year Value$799

Transfer partners

AeroplanAirline
British Airways ClubAirline
Cathay Asia MilesAirline
Etihad GuestAirline
Flying BlueAirline
Hilton HonorsHotel
Marriott BonvoyHotel

Travel insurance

Travel medical (under 55)Up to $5,000,000 / 15 days

Travel medical (55-64)Up to $5,000,000 / 15 days

Delayed BaggageUp to $500

Lost BaggageUp to $500

Flight DelayUp to $500

Hotel BurglaryUp to $500

Travel AccidentUp to $250,000

Purchase protection

Purchase ProtectionUp to $1,000 / 90 days

Extended Warranty+1 years

Mobile DeviceUp to $1,000 / 2 years

Auto Rental Collision (primary)Up to $85,000 / 48 days

Tips for a Faster Credit Card Refund

1. Go In-Person and Ask

Credit card refund time depends on several factors, and your return method is one of them. Going in person and speaking to your merchant directly is a much better way to get your refund than, say, calling or online returns. Be polite, explain why the product doesn’t work for you and see what happens.

2. Read the Policy

To protect yourself, you should be aware of a business’s return policy outside of the quick blurb a cashier may give you on your way out. Go on their website and see their policies before making that refund request.

3. Get It All in Writing

Written documentation can go a long way in the credit card refund process. You should have documentation of the receipt, the merchant confirming the return, or any other document that proves your purchase. Additionally, any correspondence you have with the company via email that confirms your refund can act as a great reminder to them to expedite your refund.

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4. Follow-up…Often

You may know of a family member or distant tie that always fights for every penny. No matter the price, they are persistent and ensure that each cent is accounted for.

It would be best if you had that same mentality regarding your credit card refund. In reality, it is not in a merchant’s interest to refund you their money, and as a result, they may not make it a priority.

The responsibility falls on you to ensure you can get your money back. Contact them often – even if you feel like you are pestering them.

Ran Out of Options? Initiate a Chargeback

If the merchant does not want to give you a refund, you may have to ask your credit card company to initiate a chargeback. Many credit card issuers will let you submit a dispute by phone, mail or online. Keep a copy of your supporting documents as your credit card issuer guides you through the process. Unfortunately, once a dispute is initiated, it could take up to 90 days.

The Bottom Line

Credit card refunds can definitely be simple if you are equipped with the knowledge to handle them. With these strategies, you are in an excellent position to protect yourself. But will you be initiating a refund anytime soon? Will this article help you? Share it with our Facebook community!

Frequently Asked Questions(FAQs)

What Happens to Credit Card Rewards When I Request a Refund?

Unfortunately, when you receive a credit card refund, you lose the rewards points you got from the original purchase. A way to avoid this would be to ask the merchant for store credit instead of a credit to your account. If it is a store you go to often, it may be worth it to keep your reward points.

Will I Receive a Foreign Transaction Fee Refund?

When you travel abroad and purchase using your credit card, the foreign transaction fee you initially charged may not be returned to you if you get a refund. However, this shouldn’t deter you from requesting a refund; you can call to ask if this would be the case.

Does a Credit Card Refund Count as a Credit Card Payment?

No. Refunds do not count as a payment toward your monthly bill. So while they do impact your total balance owing, you are still responsible for making at least your minimum payment every month.se.