Do refunds count towards credit card payments?

That Refund Won’t Pay Your Bill (Yet): Understanding Credit Card Refunds

We’ve all been there: a returned online purchase, a double-charged restaurant bill, or maybe even a generous store credit. The relief of a credit card refund is undeniable, but don’t let that sigh of relief fool you into thinking your credit card bill is magically paid.

Here’s the catch: credit card refunds are not treated as payments. This might seem counterintuitive, but understanding this crucial detail can save you from potential late fees and credit score dips.

Think of refunds as statement credits. When a refund hits your credit card account, it’s added separately from your payment transactions. This means it doesn’t directly reduce your outstanding balance in the way a payment does. Instead, it creates a positive balance on your account that offsets your debt.

What does this mean for your minimum payment? Let’s say your credit card bill is due on the 10th, and you’re expecting a refund on the 12th. Even though the refund will likely cover your entire balance, you’re still required to make at least the minimum payment by the due date. Failing to do so could result in late fees, penalty APRs, and negative marks on your credit report.

Here’s how to navigate credit card refunds effectively:

• Timing is everything: Be aware of your statement closing and payment due dates. If a refund is processed after your statement closes but before the due date, it won’t be reflected in your minimum payment amount.
• Stay proactive: Don’t assume a refund will automatically pay your bill. It’s always best to make at least the minimum payment by the due date to avoid any potential penalties.
• Keep an eye on your statement: Once the refund is posted to your account, double-check that it’s accurate and reflects the correct amount.

Credit card refunds are a great tool for correcting billing errors and receiving money back on unwanted purchases. However, it’s essential to understand how they work to avoid any surprises on your credit card statement. Remember: a refund is not a payment. Stay informed, be proactive, and keep your credit score healthy.