If you cancel a credit card and a merchant later gives you a refund, the process for getting your money back might be quick or complicated, depending on a variety of factors. You might have cancelled your credit card but not closed the account. The account might have been recently closed or closed for a long time. You might have more than one account with your credit card issuer.
Understanding how all of these factors affect getting your money back will help you choose the best option for handling the transaction of a refund on cancelled credit cards, or if the matter is even in your hands.
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Card vs. Account Closing
You can close a credit card without closing a credit card account. For example, when you close a credit card account, it can hurt your credit score. Your debt-to-credit ratio increases when you lose that card's available credit. You no longer get credit for having a card for some number of years (which helps your score). You lose the opportunity to make 12 annual on-time payments, which also boosts your score.
If you have cancelled a card but not closed the account, then any refund on a purchase or bill payment made with that card will be added to your account balance.
Refund on Cancelled Credit Card
If you have more than one financial account with the credit card issuer, it might apply the refund to your other account. For example, if you have two different credit cards with a bank and close one account, the bank might apply the refund to your other credit card account. If you have a credit card, checking account and savings account with a bank, the bank might apply your refund amount to your checking or savings account to balance.
Read More: How to Cancel a Credit Card Transaction
You’ll Get a Paper Check
In some cases, your credit card company might accept the refund on the closed account and mail you the amount in a paper check. This is less likely to happen the longer your account has been closed.
The Refund Is Declined
If your credit card account has been closed for more than several weeks, the card issuer might not accept the refund. They have no obligation to do so since you cancelled the account. Accepting the refund and asking their staff to work on it and get the funds to you costs the card issuer money – and you're not even a customer.
The Merchant Works With You
If a merchant issues you a refund and it bounces back to the merchant as not accepted, the merchant might offer to give you cash or credit on future purchases. If you know a refund is coming, call your former credit card company to find out what will happen. If they tell you the refund will be rejected, contact the merchant. See if it will give you a paper check, cash or another type of credit you can use.