Credit card refunds
Credit cards can be a convenient way to manage your money. But what if you pay for something with your credit card and the company goes bust or doesn’t deliver what it promised? Can you get your money back?
Here’s what you need to know about credit card refunds, how the process works and what protection you might get.
Credit cards can be a convenient way to manage your money. But what if you pay for something with your credit card and the company goes bust or doesn’t deliver what it promised? Can you get your money back?
Here’s what you need to know about credit card refunds, how the process works and what protection you might get.
How do credit card refunds work?
To understand refunds, it’s important to understand how credit card payments work.
When you use your credit card, technically you’re not spending your own money. You’re borrowing it from your credit card provider who pays the vendor on your behalf.
Your credit card provider will then add the amount to your credit card balance, which you’ll pay off in full, or partially, each month.
The process of a credit card refund works in reverse. If the vendor agrees to a refund, they’ll return the money to your credit card provider, not you. Your credit card provider will then take that amount off your monthly balance, therefore reducing the amount you owe them.
Steps to get your money back
Getting your money back should be pretty straightforward. Here’s how to claim a refund for something you bought with a credit card:
1. Contact the vendor
You should always contact the vendor first. Most retailers have a returns policy and are happy to give you a refund straight away.
If you used your credit card in a shop, you should return to the retailer with the item and its original packaging, your credit card and receipt. If you don’t have the receipt, a credit card statement showing the transaction should suffice.
If you used your credit card online, the vendor should have a returns and complaints procedure on its website. If you want to write to them, Citizens Advice has a template letter you could use.
Make sure you keep a record of all correspondence between you and the vendor.
2. Get your refund
If the vendor agrees to your request, they’ll refund the money directly back to your credit card provider. It’s unlikely you’ll get a cash refund. This is because your own money was never actually used during the transaction.
As soon as your credit card provider receives the refund, they’ll credit your account, therefore reducing your outstanding credit card balance.
If the vendor refuses to give you a refund
If the vendor ignores your request or refuses to give you a refund, you may still be able to get your money back. These are the steps to take:
- Write to your credit card provider, or contact them via their website or app.
- Give them details of the purchase and explain that the vendor is refusing to give you a refund.
- If your credit card provider agrees with you and your case is successful, they’ll refund the money to your credit card account.
What are the different methods for credit card refunds?
There are different ways a credit card refund can be made, depending on the details of your claim.
Section 75 claims
If you use your credit card to buy something that costs over £100 and up to £30,000, you may be protected by Section 75 of the Consumer Credit Act. This means the credit card provider has equal liability with the vendor if there’s something wrong with your purchase.
If the vendor refuses to give you a refund or they’ve gone bust, you should contact your credit card provider and tell them you want to make a claim under Section 75 of the Consumer Credit Act.
Your credit card provider is obliged to look into your case and, if they agree with you, issue a refund.
Chargeback claims
If your purchase doesn’t qualify for Section 75 – for example, it’s £100 or less – you may be able to get a refund or part-refund through Chargeback.
Unlike Section 75, Chargeback is not a legal right. It’s an agreement that Visa, Mastercard and American Express have signed up to.
With Chargeback, your card provider can try to get the money back by reversing the transaction. You’ll need to provide evidence to support your claim. And be aware there are time limits for making a Chargeback claim – usually within 120 days of making the purchase.
The Chargeback process can be a lengthy one and there’s no guarantee you’ll get your money back.
Store credit as an alternative to refunds
If you’re returning an unfaulty product because you’ve simply changed your mind, high-street stores aren’t legally obliged to give you a refund. However, they may offer you a gift voucher or credit note as a ‘goodwill’ gesture.
Most retailers impose time limits on when you can return non-faulty goods – usually within 28 days of making the purchase.
The store’s return policy will say if vouchers or credit notes are given as an alternative to a refund. But they can only apply this to items that are unwanted and unfaulty.
What should I consider when pursuing a credit card refund?
There are some situations when getting a credit card refund may be a little more complicated.
Mixed payment methods
If you use your credit card to make a part payment on something, then pay the rest with a debit card or cash, you can still use Section 75 to get a refund, as long as the total cost is more than £100 and less than £30,000.
Let’s say you buy something for £300 and use your credit card to pay a £30 deposit, then pay the rest in cash. You may be able to claim a refund for the entire £300 under Section 75 if the goods were faulty or didn’t arrive.
If you split the cost of something between two credit cards, you can only claim Section 75 on one of the cards, not both.
Third-party purchases
You might not be protected by Section 75 if you bought something on your credit card via a third party, such as Amazon, Paypal, eBay or a travel agent.
If your credit card provider refuses your claim under Section 75, you could ask them to use Chargeback instead. However, there’s no guarantee you’ll get your money back.
Second cardholders
Only the main cardholder (the person who signed the credit agreement) can make a Section 75 refund claim. This means any refund claims for purchases made by a second cardholder are likely to be rejected by the credit card provider.
You might be able to claim if it was a joint purchase, such as a family holiday, or it’s something for the main cardholder – for example, a birthday present.
Ask your credit card provider what rules apply to second cardholders before you start a claim.
Did you know?Although you won’t be protected by Section 75, third-party retail sites like Amazon usually offer their own payment protection plans. For example, with Amazon’s A-Z Guarantee, if you buy from a Marketplace seller and something goes wrong, you can make a claim directly to Amazon and their team will determine if you’re eligible for a refund. |
How long do credit card refunds take?
If the vendor accepts your request, a credit card refund usually takes between three to 10 days to reach your account. Most retailers will refund you instantly, while some may take longer. It also depends on your credit card provider and their refund procedure.
However, credit card refunds can take a lot longer if your claim is being disputed. Some billing and fraud disputes can take months to resolve.
What should I do if my claim isn’t successful?
If you’ve tried all means to get a refund without success, as a last resort you could take your case to the Financial Ombudsman. However, there’s still a chance you won’t get your money back.
The Financial Ombudsman offers a fair, impartial and free service to help settle disputes between consumers and businesses. They’ll examine your case from both sides before making a decision.
What do I do if I’m not happy with the ombudsman’s decision?
If you’re not happy with the ombudsman’s decision, you might be able to get help from an ‘alternative dispute resolution’ (ADR) scheme.
Check to see if the trader is a member of an ADR scheme. If so, ADR can act as a mediator and may offer a way to solve your problem without it going to court.
How do refunds affect my credit?
A credit card refund doesn’t count as a payment, so it shouldn’t affect your credit score. But it might affect your credit utilisation ratio – in other words, how much of your credit card limit you’ve used.
A refund may lower your credit utilisation ratio, which can be a good thing. Keeping your ratio low could prove to lenders that you’re being careful with your spending. It might get you a lower interest rate if you’re borrowing in the future.
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Frequently asked questions
What happens if I get a refund paid to a credit card with no balance?
If you’ve paid off your credit card in full and have no outstanding balance, your credit card statement will show a ‘negative balance’.
A negative credit card balance means your account is in credit. In other words, your credit card provider owes you money instead of the other way around.
What happens if my refund is sent to a cancelled credit card?
If your credit card has been cancelled or has expired, your credit card provider should redirect the refund to your new card. If you don’t have a new card, they may send you a cheque or transfer the money directly into your bank account.
Do you have to use the same card for a refund?
Yes, you can only receive a refund on the card that was used to make the payment.
Do credit cards offer more protection than debit cards?
Credit cards can offer more protection than debit cards. Unlike credit cards, debit card payments aren’t protected by Section 75. Debit card payments may be covered by Chargeback.
