Credit cards and refunds

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Forums › Finance and wealth management › Credit cards and refunds

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#1041303 10-May-2014 12:13

No because your balance is 0 so nothing is payable. If you buy 500 and refund 100 you have a balance of 400 so the minimum payment is based on the 400 amount. You can't say that the refund has covered your minimum payment and not pay anything.

Richard rich.ms

heavenlywild

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#1041345 10-May-2014 15:05

rugrat: Most answers say not a payment.

So if you brought $500 on card from one store, then returned it and got $500 credited back to card so balance is now $0 on card, then the credit card company would still expect payment of $500 even though there is currently nothing owing on card?

Seems a strange one.

OK called the bank. The answer is: No, it does not count towards payment. A little odd if you ask me especially in the example quoted above.

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#1041364 10-May-2014 15:51

heavenlywild:
rugrat: Most answers say not a payment.

So if you brought $500 on card from one store, then returned it and got $500 credited back to card so balance is now $0 on card, then the credit card company would still expect payment of $500 even though there is currently nothing owing on card?

Seems a strange one.

OK called the bank. The answer is: No, it does not count towards payment. A little odd if you ask me especially in the example quoted above.

How is it a little odd? It makes perfect sense. The refund is not a merchant paying you money or even paying your card on behalf of you. The refund is the merchant returning the bank's money for a product or service not rendered. All it does is reduce the minimum payment by whatever proportion of the payment is accounted for by that purchase.

nigelj

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#1041368 10-May-2014 16:00

Kyanar:
heavenlywild:
rugrat: Most answers say not a payment.

So if you brought $500 on card from one store, then returned it and got $500 credited back to card so balance is now $0 on card, then the credit card company would still expect payment of $500 even though there is currently nothing owing on card?

Seems a strange one.

OK called the bank. The answer is: No, it does not count towards payment. A little odd if you ask me especially in the example quoted above.

How is it a little odd? It makes perfect sense. The refund is not a merchant paying you money or even paying your card on behalf of you. The refund is the merchant returning the bank's money for a product or service not rendered. All it does is reduce the minimum payment by whatever proportion of the payment is accounted for by that purchase.

What an odd statement to make. Refunds can be any number of reasons or time frames (even months after a purchase has been paid off in full). This is why some odd situations including large amounts of actual credit, can be left sitting in one's credit card account due to unexpected large spends and refunds. Saying it's the "Bank's money" isn't right.

Kyanar

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#1041372 10-May-2014 16:06

nigelj:
Kyanar:
heavenlywild:
rugrat: Most answers say not a payment.

So if you brought $500 on card from one store, then returned it and got $500 credited back to card so balance is now $0 on card, then the credit card company would still expect payment of $500 even though there is currently nothing owing on card?

Seems a strange one.

OK called the bank. The answer is: No, it does not count towards payment. A little odd if you ask me especially in the example quoted above.

How is it a little odd? It makes perfect sense. The refund is not a merchant paying you money or even paying your card on behalf of you. The refund is the merchant returning the bank's money for a product or service not rendered. All it does is reduce the minimum payment by whatever proportion of the payment is accounted for by that purchase.

What an odd statement to make. Refunds can be any number of reasons or time frames (even months after a purchase has been paid off in full). This is why some odd situations including large amounts of actual credit, can be left sitting in one's credit card account due to unexpected large spends and refunds. Saying it's the "Bank's money" isn't right.

Not at all. A refund is for one reason and one reason only: a refund. It is not a payment. This is CLEARLY defined in the merchant agreement and various anti-money laundering/fraud leaflets that come with the vast 10 page contract. You cannot use a refund for anything other than returning money for a specific purchase. The reason you are returning the money for the specific purchase is irrelevant.

billgates

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#1041375 10-May-2014 16:15

Looking at my ANZ credit card statement, refunds from places like The Warehouse and an online web store the following month showed up under the payments section and my balance was reduced. Now I do not know whether this also reduces my rewards balance with ANZ scheme. I know refund from a retailer with my ASB credit card also reduced my true rewards points that I gained the month before.

Do whatever you want to do man.

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PenultimateHop

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#1041386 10-May-2014 16:29

heavenlywild:
rugrat: Most answers say not a payment.

So if you brought $500 on card from one store, then returned it and got $500 credited back to card so balance is now $0 on card, then the credit card company would still expect payment of $500 even though there is currently nothing owing on card?

Seems a strange one.

OK called the bank. The answer is: No, it does not count towards payment. A little odd if you ask me especially in the example quoted above.

It would be interesting to know which bank it is. Fairly sure that ASB and American Express work exactly as your example quotes, and that's been my experience. That said, I'd take the bank as authoritative versus a random person on the Internet.

Every credit card I hold where this scenario has occurred the refund (or credit) has reduced the payment due. If the refund exceeds the balance due then no payment is required (although I've only had that happen once or twice).

gzt

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#1041397 10-May-2014 16:58

I would expect it to reduce the total balance owing. I would not expect it to reduce the minimum payment required (except a %age reduction in the minimum payment due). Why on earth would it?

But if it does - well good for you. You should be able to structure your affairs so you never have to pay a cent of your credit card bill ever : ). Well, until you reach the limit then you are owned lol.

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PenultimateHop

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#1041400 10-May-2014 17:03

gzt: I would expect it to reduce the total balance owing. I would not expect it to reduce the minimum payment required (except a %age reduction in the minimum payment due). Why on earth would it?

That's quite possible for the minimum payment requirements. I've never paid an amount other than the due balance so I have no experience with what happens in that case. Paying only the minimum balance is rarely going to be a good financial decision.

eracode

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#1041575 11-May-2014 04:37

Talking about 'refunds' might be confusing the issue. Surely it's just a credit to the card account like any other credit/payment. Even if it happens on the same day, the credit ('refund') does not change the value of the original debit/purchase transaction - it's always a new, separate transaction.

If it occurs and is processed in the same billing cycle as the original debit transaction, the credit will decrease the balance payable on the card at the end of that cycle.

If it's processed during, say, the next cycle/month, the full original amount will be payable in the first month and a reduced total card balance will be payable in the second month. If the card has not been for anything else in the second month, the card will go into a credit balance position.

Sometimes I just sit and think. Other times I just sit.

Kyanar

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#1041602 11-May-2014 09:34

eracode: Talking about 'refunds' might be confusing the issue. Surely it's just a credit to the card account like any other credit/payment. Even if it happens on the same day, the credit ('refund') does not change the value of the original debit/purchase transaction - it's always a new, separate transaction.

If it occurs and is processed in the same billing cycle as the original debit transaction, the credit will decrease the balance payable on the card at the end of that cycle.

If it's processed during, say, the next cycle/month, the full original amount will be payable in the first month and a reduced total card balance will be payable in the second month. If the card has not been for anything else in the second month, the card will go into a credit balance position.

A refund is not a credit to the card account. A refund is a reversal of a debit to the card account. Very different thing.

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PenultimateHop

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#1041608 11-May-2014 09:46

Kyanar:
eracode: Talking about 'refunds' might be confusing the issue. Surely it's just a credit to the card account like any other credit/payment. Even if it happens on the same day, the credit ('refund') does not change the value of the original debit/purchase transaction - it's always a new, separate transaction.

If it occurs and is processed in the same billing cycle as the original debit transaction, the credit will decrease the balance payable on the card at the end of that cycle.

If it's processed during, say, the next cycle/month, the full original amount will be payable in the first month and a reduced total card balance will be payable in the second month. If the card has not been for anything else in the second month, the card will go into a credit balance position.

A refund is not a credit to the card account. A refund is a reversal of a debit to the card account. Very different thing.

From the perspective of the merchant and the acquirer perhaps. From the perspective of the card-issuer and card-holder, probably not.

It shouldn't actually be too hard to test the whole theory; and I am very much inclined to agree with eracode's explanation since it matches my actual experience as mentioned upthread.

eracode

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#1041639 11-May-2014 11:43

Kyanar:
eracode: Talking about 'refunds' might be confusing the issue. Surely it's just a credit to the card account like any other credit/payment. Even if it happens on the same day, the credit ('refund') does not change the value of the original debit/purchase transaction - it's always a new, separate transaction.

If it occurs and is processed in the same billing cycle as the original debit transaction, the credit will decrease the balance payable on the card at the end of that cycle.

If it's processed during, say, the next cycle/month, the full original amount will be payable in the first month and a reduced total card balance will be payable in the second month. If the card has not been used for anything else in the second month, the card will go into a credit balance position.

A refund is not a credit to the card account. A refund is a reversal of a debit to the card account. Very different thing.

What say I buy three items from a shop for a total of $300. I then take one item back which cost $75 and the shop gives me a credit for $75. How can that be a reversal of a debit? The debit was $300.

Also, what say the $300 debit has been statemented on the cutoff date and after that I take the $75 item back and get a credit. The credit will show up in the second month's statement - so it can't be a reversal of a debit.

Sometimes I just sit and think. Other times I just sit.

andrewNZ

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#1041640 11-May-2014 11:49

If I read correctly, the main question here is "does a refund count towards my 'minimum amount to pay' at billing time"

I suspect the answer is no, although it will reduce it proportionally due to the reduction in outstanding balance.

eracode

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#1041645 11-May-2014 11:58

andrewNZ: If I read correctly, the main question here is "does a refund count towards my 'minimum amount to pay' at billing time"

I suspect the answer is no, although it will reduce it proportionally due to the reduction in outstanding balance.

The refund credit will count towards reducing the full and the minimum amounts to pay (from what they would otherwise have been without the credit) in the current month if the credit has been processed in the current month.

If it is processed after the cutoff date, it will reduce the full and minimum amounts in the month it is processed.

Sometimes I just sit and think. Other times I just sit.

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