Credit Cards

How Do Refunds On Credit Cards Work

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 7 minute read

When you obtain a refund, what happens to the points you’ve accrued on your credit card? These five cards will assist you in regaining control of your finances. Getting a refund is usually a positive thing. To provide an example, you can feel a sense of relief when you return a costly sweater to the store and get your money back. You may even reward yourself with a night out on the town after receiving a little refund cheque from the IRS. Isn’t it exciting?

Refunds, on the other hand, are not always welcome. The question of “do you lose points when you obtain a credit card refund?” is a common one among those who use rewards credit cards.

What happens to your points when you get a refund?

Your next credit card statement will show a reduction in your points balance since, unfortunately, this is the way it works in the majority of circumstances. You will lose 100 points if you spend $100 on a credit card and receive 100 points for the red sweater, which will be deducted from your card when the refund is processed.

Isn’t that the case? High-earning credit cards need credit card issuers to have a successful business model. They would be an obvious target for fraud if they didn’t keep a tight check on the points they received as a result of reimbursements.

While it’s frustrating to watch your points balance drop when you receive a refund, receiving a return on a new credit card may be downright catastrophic. Spending $3,000 in the first three months earns you an attractive welcome bonus on your brand-new credit card. You’re on schedule to spend $3,000 on the card in three months if you spend $1,000 a month. If you don’t return that $100 red sweater, everything will be ok.

You receive a return on your credit card, and at the end of your third month, you have only spent $2,900. As a result, you no longer qualify for that enticing incentive – facepalm!

Are there any circumstances in which I can retain my points?

Yes! However, as the saying goes, you can’t have your cake and eat it too. There you have it. Even if you return the red sweater to the retailer, you may still keep your points if you opt to receive store credit instead of having your credit card account charged. Using a credit card to buy a sweater means that the credit card company does not know that you have later changed your mind about the purchase. Because of this, they are unable to reclaim the points.

You can return to this store and select a different item that you truly desire, and you will maintain your points. However, if you absolutely wanted that money back in your account, rather than locked up in credit at a single business, you’d be out of luck. – If you’re looking to rack up a ton of points, this isn’t the method for you.

If you use a credit card rewards program to plan travel, you’ll have another fascinating option. Refundable flights and hotels may be booked with Chase Ultimate Rewards points and Chase collects the points on your behalf and pays the airline or hotel in cash. The airline does not know if you booked with points or cash since it receives your booking through Chase. If you need to change or cancel your ticket, the airline will repay you in cash rather than points.

4 rewards cards that help you rack up a lot of points

It doesn’t matter how much you lose in points when you get a refund; there are several straightforward ways to get them back. A profitable shopping site may offer a way for you to “stack” your benefits when you go shopping next time. (Read more about stacking here.) It’s also possible to sign up for a new credit card that will allow you to accrue points more quickly. To assist you to maximize your points, we’ve outlined the following four possibilities.

Chase Sapphire Preferred

Year after year, this now-classic card remains a fan favorite, and it’s simple to understand why. For starters, the sign-up bonus is significant. After spending $4,000 in the first three months, new cards will receive 60,000 points – enough for $750 worth of travel!

One of the reasons the Chase Sapphire Preferred is so well-liked is the simplicity and ease with which Chase Ultimate Rewards points may be redeemed with it. They are worth 1.25 cents apiece if you use them to book travel through the Chase site. Alternatively, you may transfer to one of several major airline partners, such as Marriott, United, or Southwest, directly.

There are better cards out there, but this one offers 5X points on Lyft rides and trips booked via Chase Ultimate Rewards (until March 2022), 3X points on qualified restaurants and certain streaming services and online grocery purchases, 2X points on travel, and 1X points per $1 on everything else. Additionally, you’ll receive 10% of the total purchases completed in the previous year as an anniversary incentive.

The Chase Sapphire Preferred should be in your pocket if you’re looking for a good sign-up offer and flexible points that are simple to earn and spend.

Hilton Honors Surpass Card from American Express

Isn’t this a fantastic welcome gift? If you’re looking to rack up a lot of Hilton Honors points, the Surpass American Express credit card is a wonderful option. In the first three months, you’ll rack up 130,000 Hilton Honors points, and they’ll keep on coming for as long as you keep spending.

In addition to earning 12X points when making purchases directly at an eligible Hilton hotel or resort, Surpass cardholders also get 6X points on making purchases at U.S. restaurants, supermarkets, and petrol stations, and 3X points on all other qualifying purchases. This is far more than the typical 1X point bonus offered by many credit cards.

When you combine your 12X earnings from qualified purchases within the Hilton portfolio with Hilton’s regular promotions for double or even triple points on hotel stays, you’ll quickly have enough points for a wonderful Hilton holiday.

If you’ve got a Hilton Honors credit card, you’ll get advantages like complimentary breakfast, upgraded rooms, free Wi-Fi, and a late checkout time. Booking with points also entitles you to a free fifth night.

Capital One Venture Rewards

Acquired quickly and easily. Because it’s so straightforward, the Capital One Venture Rewards credit card is one of the most well-known and most widely used available today.
Once you get your feet wet with 60,000 extra miles after spending $3,000 in the first three months, it’s easy to keep earning Venture rewards. On hotel and rental vehicle bookings made via Capital One Travel, cardholders receive 5X miles and 2X miles on all other transactions.

Redeeming your Venture miles is as straightforward as earning them. It is possible to book new trips directly through Capital One, redeem miles for gift cards, or to utilize statement credits to “erase” previous travel expenditures using miles. You may fix the value of a mile at one cent with any of these redemption choices.

Using this card, you won’t have to deal with seat limits or worry about award availability on specific days. To redeem your miles, simply go into your account and click on the “miles balance” link.

Virgin Atlantic World Elite Mastercard

A shame, because the Virgin Atlantic World Elite Mastercard may help you rack up miles at a rapid pace. After making a $1,000 purchase during the first 90 days, new cardholders can receive 30,000 Virgin Points. Virgin Atlantic cards receive 3X miles for every dollar spent directly with the airline and 1.5X miles on all other transactions.

With an annual spending limit of $25k, you’ll earn a free ticket for a friend. A complimentary companion reward is included when you redeem Flying Club points for a Virgin Atlantic reward ticket. Using your Virgin miles to purchase an upper-class ticket gives you the opportunity to fly for free with a buddy who will be sitting right next to you.

Virgin Atlantic has a number of partners despite the fact that it is not a member of any of the major airline alliances. In addition to Delta, Singapore, and Hawaiian Airlines, you can use your Flying Club points to purchase tickets on these airlines and many more!

How does a refund to a credit card work?

Refunds are automatically applied when a purchase is made using a credit card and then canceled or returned. Depending on the merchant and your credit card company, you may have to wait two to ten business days to receive your money back. Your current bill cycle will be adjusted to reflect any credit you are entitled to.

In the event of an overdraft, what do I do with my credit card refund?

A refund will be credited to your credit card bill. If the card has no remaining balance, the refund will appear as a credit on the account (a negative statement balance), and the money can be used to pay for future transactions. Alternatively, you may be able to get a physical check or an ACH refund from your bank or credit card company.

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