1. How a credit card refund works
When you purchase something using a credit card, you basically agree to buy the item now but pay later when your credit card statement comes. The merchant, however, gets paid immediately by your credit card company. As a result, if you decide to return your purchase, the merchant does not refund the money to you directly; it gets put back on your credit card account. Typically, all you need to complete a refund on a credit card is the receipt for the purchase and the credit card used. Then, the merchant will reverse the charge, and the refund will be posted to your credit card account. How quickly that refund will be posted is an open question. Spending money on a credit card is practically instant, but getting it back is slower.
2. How long does a credit card refund take?
There are no legal rules around how long refunds take to process. It depends on the individual merchant’s refund policy. Refunds can take between two and 90 days, but normally take three to five days. If they take longer, you can’t communicate with the merchant, or the refund is disputed, you can dispute the charge with your credit card company and initiate a chargeback, as explained below.
3. Types of credit card refunds
There are two types of refunds:
Refunds at the Point of Sale
This is the type of refund described above where you bring your item, receipt and credit card back to the store, and the merchant initiates the refund right in front of you. (If the purchase was made online, contact the merchant to find out how they handle returns and refunds.)
If the merchant doesn’t agree to issue a refund, you can dispute the transaction with your credit card company. This will begin the process of refunding all or part of the transaction through a credit card chargeback. Typically, your card provider will give the merchant 30 days to respond and, if they don’t, the transaction will be reversed. In a case like that, the merchant’s bank will likely charge the merchant a steep financial penalty for having to return the money.