 TITLE: How Do Credit Card Refunds Work? CONTENT: How Does a Refund Affect Your Credit?\n-------------------------------------\nMoney refunded to your credit card account is considered an account credit; it doesn't count as a payment or partial payment. If you incorrectly assume getting an account credit eliminates the need to make a monthly payment, you could end up paying late fees or even damage your credit score. Be sure to keep making payments on your balance while you're waiting for the statement credit to post.\nIf you make a credit card purchase, don't pay the balance off when your statement arrives, and later return the item, you'll be responsible for any interest that accrues on the purchase amount before your refund posts. If you buy an expensive item and carry a balance, this interest can be costly. Unfortunately, your refund won't reimburse you for any interest you may have paid before returning the purchase.\nIn certain situations, credit card returns can affect your credit score. An account credit can boost your credit score if it reduces your credit utilization ratio, which compares the total amount of revolving credit you're using to the total amount you have available. Credit scoring models consider your credit utilization ratio when calculating your credit score; reducing this ratio to 30% or less can help you avoid hurting your score.\nHowever, a credit card refund that takes a long time to show up on your account could hurt your credit score if the purchase amount pushes your credit utilization ratio above 30%. Suppose you have a credit card with a $6,000 limit and you use it to make a $3,000 purchase that you later return. Until the $3,000 credit posts to your account, you'll be using 50% of your available credit on that card.\nAre you within a few points of earning a big reward on your credit card, such as a cash back bonus? Be aware that any credit card rewards points, cash back or other perks you earned on the returned purchases will disappear when the return is processed. There's one way around this if you really want to keep your hard-earned points: Ask for a store credit instead of a credit card refund. The credit card company won't be involved in the return transaction, so your earned points will be safe. END