Every credit card today offers some kind of a reward program to the cardholder, as you’ve seen in one of the previous chapters. Here, we’ll take a closer look at the rewards and on credit cards and the refunds on credit cards. So, let’s get started.  

Credit card rewards

Credit card rewards are offered on the transactions that you make using your card. Typically, you can earn any of the following kinds of rewards. 

• Reward points:

You can earn reward points or credit card points on certain eligible transactions. And on a specified date or after a specified period, you can redeem these reward points for other benefits. 

• Miles:

Here, you can redeem the miles you accumulate to book national or international flight tickets, based on the terms and conditions of your card.

• Cashbacks:

Lastly, the rewards on credit cards sometimes come in the form of cashbacks. A specified percentage of the transaction value is credited back into your account. 

Credit card returns

Returning goods bought with a credit card seems to be straightforward. After all, you may usually return an item for a full refund as long as you follow the retailer's or store's return policy. However, depending on the conditions of your purchase and return, returns on credit card procedure may include additional stages and variables. Here are a few things you should know when initiating returns on credit cards, from the effect on your reward point earnings to being liable for foreign transaction fees on overseas transactions.

How do refunds on credit cards work?

When you first make a purchase, the merchant double-checks that your credit card information is correct, confirms that your card is active, and then processes the payment from the credit card company. And when you return a goods to a shop using a credit card, the transaction is processed by your credit issuer. 

As a result, if you wish to return an item, you'll almost certainly have to take store credit or produce the original credit card you used to make the transaction. If you make a return transaction using a debit card, certain stores will enable you to obtain a cash refund. However, if you use a credit card, you will not be allowed to do so.

What if I want to return something I bought somewhere else in the world?

If you buy and return an item for a refund on a credit card while travelling overseas, you may still be charged an overseas transaction charge. Although it varies based on the credit card provider, this charge is usually about 3% of the overall purchase price. With this in mind, you should call your credit card provider ahead of time to learn about their regulations. Many credit cards, for example, impose international transaction fees, but other travelling credit cards may waive these charges.

How long will it take for credit card refunds to show up in my account?

You will get a statement credit on your credit card account after you have returned the item to the shop. This statement credit may appear in your online account within a few days, depending on your credit card provider and the retailer. Within one or two payment cycles, it should also reflect in your monthly account.

How do refunds on credit cards appear?

If you had a credit card debt before filing for a return, the refund will most likely show up as a credit on your account, reducing the total amount outstanding on your credit card.

However, if you paid off your whole credit card debt before making the return, your credit card statement will reflect a negative balance. This signifies that the creditor owes you the relevant amount, since the remainder has already been paid by you. In this instance, you may keep using the card while having your future payments lowered by the credit. Alternatively, if you'd prefer your credit returned to you in the form of a check or statement credit, you may file a request to your credit provider.

If I return purchases, will I forfeit the rewards on my credit card associated with the said purchase?

Once the transaction has been posted to your account, the reward points or credit card points earned via the purchase will be removed from your refund on credit card point earnings (which may include bonus points). If you used up all of your rewards on a credit card before returning, this will show up as a negative balance in your online portal's reward point accumulation.

You can keep track of modifications to your monthly bills and your rewards on credit cards by understanding how returns on credit cards operate. In addition to this, it is also a good idea to do some research on which credit cards to use overseas by understanding how credit card returns work.

Wrapping up

This should give you a good idea of how rewards and returns on credit cards work. A word to the wise - always make sure that you read the terms and conditions on your credit card to understand how the rewards and returns associated with the card work. This helps you be better prepared for any reduction in credit card points or additional fees that may be levied for returns. 

A quick recap

• Credit card rewards may be available in the form of reward points, miles or cashbacks. 
• Depending on the conditions of your purchase and return, returns on credit card procedure may include additional stages and variables. 
• If you wish to return an item, you'll almost certainly have to take store credit or produce the original credit card you used to make the transaction. 
• If you buy and return an item for a refund on a credit card while travelling overseas, you may still be charged an overseas transaction charge. 
• If you had a credit card debt before filing for a return, the refund will most likely show up as a credit on your account. However, if you paid off your whole credit card debt before making the return, your credit card statement will reflect a negative balance.