Credit card refunds — how do they work?

Key takeaways

• A credit card refund occurs when a cardholder is reimbursed for a purchase made using a credit card

• If the retailer denies you a refund, the credit card company will review your case and reimburse you if they agree you were wrongly rejected

• Each provider follows its own process before crediting the refund to the cardholder’s card balance

• Under Section 75, the cardholder isn’t liable to bear the cost if goods or services are unsatisfactory or undelivered

When you’re making a purchase, paying with a credit card works in the same way as using a debit card or cash – at least at the point of transaction, meaning you get what you paid for, and the retailer gets their money.

However, you do not actually spend your own cash when you use a credit card. Instead, the money is borrowed from the card company, which you pay back at the end of the month, either in part or in full.

This lets you spread larger purchases out over a few months, and you can use it to tide you over until payday.

This makes the process of getting a refund slightly different. Here’s what you need to know.

What is a credit card refund?

A credit card refund is when you are reimbursed for a purchase made on your credit card.

The refunded amount might come direct from the retailer or you might need to go through your credit card company using Section 75 of the consumer credit act.

The refund will then usually be deducted from your current credit card balance i.e. the amount you owe.

How does a credit card refund work?

When you buy something with a credit card, the merchant takes the payment from the credit card issuer. The issuer pays the vendor and adds it to your credit card balance – a running total of all the purchases you’ve made in this way.

The refund process works like this in reverse: when the vendor agrees to a refund, the money is returned to the credit card provider, who will then reduce the balance you owe.

This is why most retailers prefer not to give cash refunds when you use a credit card, as your money is never actually used during either transaction.

How do I claim a refund on something I've purchased with my credit card?

Claiming a refund on something you’ve purchased with your credit card should be straightforward, particularly if you haven’t used the goods or services you bought.

1. Contact the retailer and provide them with the details of the credit card you used to make the purchase. Have your receipt to hand, as well as details of their return policy and your recent credit card transactions. If you don’t have your receipt, showing another kind of proof of purchase (such as the credit card statement) should suffice. 

2. If the retailer agrees to the refund request, they will refund the amount directly to your credit card issuer who will adjust your card balance and credit limit to reflect this. It means that any outstanding credit card balance will be reduced. 

If the retailer does not respond to your request or refuses to issue a refund, you may still be able to get your money back. Contact your credit card company and tell them:

1. The details of what you bought and how much you paid. Again, try to provide a receipt or other proof of purchase. 

2. Explain that you’ve not been able to get a refund from the retailer and include details of any correspondence. 

3. Stress you are making a claim for your refund under Section 75 of the Consumer Credit Act and keep a record of the email you’ve sent. 

4. Your credit card company is obliged to look at your case and issue a refund – by making a chargeback from the seller – if they agree you have wrongly been rejected.

What if my claim isn’t successful?

If you attempt to use Section 75 but are still unable to get your money back, you can contact the Financial Ombudsman to review your case. But there is still a chance that you won’t be reimbursed.

If you try to get your money back through chargeback but aren’t successful, contact your card provider directly and ask them why they won’t refund you.

If your provider says they’ve appealed to the merchant’s bank and the appeal failed, then unfortunately you can’t do anything.

However, if they refused to appeal to the merchant’s bank, then you can complain to the Financial Ombudsman Service.

The Financial Ombudsman Service is an impartial and free service used to settle disputes between consumers and businesses.

They’ll examine your case from both sides to reach a decision they think is fair. You still might not get your money back, though.

How long does a credit card refund take?

Credit card refunds usually take between three and seven days, but this can vary depending on the merchant, the billing cycle and your credit card provider.

Depending on the merchant’s policy, most will process a refund instantly, but some take a few extra days, depending on which business days the company operates.

Likewise, each provider has their own process to follow before the refund is credited to your card balance and you get the cash back. 

Of course, this only applies to refunds which both parties – the buyer and the seller – have agreed on. A refund could take much longer if your merchant tries to dispute the refund. Unfortunately billing and fraud disputes can take months. 

If you do need to open a billing or fraud dispute, contact your card issuer quickly. It will be able to demand a chargeback from the vendor.

How does Section 75 help with refunds?

Section 75 is a very useful UK credit card consumer purchase protection law that helps make credit cards one of the best ways to make larger purchases.

It effectively means that your credit card issuer is legally obliged to take the same responsibility as the retailer if a purchase goes wrong. 

Effectively, this means you can’t be made to pay off debt (i.e. your credit card balance) for goods or services that you either didn’t receive or which weren’t up to scratch.

This is a powerful piece of purchase protection legislation for purchases worth between £100 and £30,000, and it makes credit cards a good option for more expensive purchases.

You won’t end up out of pocket for instance if you buy a car from a dealer which goes bust before you can take delivery. Even better, Section 75 return protection applies if you put just £100 of the purchase onto a credit card. 

If you need to invoke Section 75, get in touch with your credit card provider, who will be legally obliged to take things further. Our guide to credit card protection provides more information.

Other useful guides 

For more information about credit and debit cards, see our guides, including: 

Guide to credit card protection 

What is chargeback? 

What type of credit card is best? 

Compare credit cards with MoneySuperMarket  

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