Credit Card Refund Rules Guide

Credit cards can be beneficial if you use them responsibly. From spreading the cost of purchases to positively building your credit profile, they have many potential benefits, especially if you follow established good practice on how to use your credit card correctly

However, what happens if you use your credit card to make a purchase but need a refund because the item is faulty, or you’ve changed your mind? Before you start spending, it’s essential to understand the credit card refund policy and know your rights. 

When you pay with a credit card, things work a little differently compared to paying with cash, debit card, or bank transfer. The good news is that purchases made by credit card may have better protection.

What is a credit card?

Before we get into credit card refund rules, let’s explain what a credit card is. Just like the debit card for your bank account, a credit card is a small plastic card you can use to pay for goods and services and withdraw cash. Unlike your bank card, the funds aren’t your own money, but an amount the credit card provider has agreed for you to borrow.

How does a credit card work?

Credit cards offer you an amount of credit – a fixed amount you can borrow, which you can effectively spend on whatever you like. Your credit limit is the total amount you can borrow. Once you have a credit card, you are not under any obligation to use it unless you want to. In short, if you make no purchases, you will have no repayments. 

When you make purchases, you are required to make a repayment. This can either be in full or the minimum monthly payment. The latter allows you to spread the cost of a purchase over a more extended period, although you will incur interest. 

However, if you clear the balance in full before the payment date, you can get up to 56 days interest-free with no charges whatsoever.   

Credit cards are available from dozens of banks, building societies and standalone card issuers. In the UK, they universally carry the brand logo of either American Express, Mastercard or Visa, the credit card’s payment processor. 

For more detailed information on credit cards, including how to choose the best one for you, the application process, key features, and how to use them, check out our credit cards page. 

Credit card benefits

Every credit card provider offers different incentives to win your business. Still, some of the general benefits include things like interest-free periods, spreading payments, getting cash back on purchases, building or rebuilding your credit history, acquiring air miles, points, or other rewards. 

One of the most significant benefits of credit cards is better purchase protection when it comes to refunds and returns. This is thanks to Section 75 of the Consumer Credit Act 1974.

Can you get a refund on a credit card?

The quick answer is yes – and the legal protection is actually better than when buying goods or services using other methods. Credit cards also come with several extra benefits related to consumer protection, making them one of the best choices for high-value purchases in particular.  

Credit card refund policy

Credit cards have an advantage over cash, debit cards, and other payment methods, thanks to more excellent legal protection for purchases. 

If your goods are faulty or damaged, or the service you paid for was never provided, then you should be able to claim the money back through your credit card provider. This protection falls under Section 75 of the Consumer Credit Act 1974. It is especially beneficial when making large, expensive purchases or travelling abroad.  

Section 75 of the Consumer Credit Act 1974 is a law that protects you when using your credit card to buy goods or services costing over £100 and up to £30,000. The law dictates that your credit card company is just as responsible for any breach of contract as the retailer or seller. Subsequently, suppose a product is faulty or doesn’t arrive, and you are unable to obtain a refund from the seller. In that case, you can approach your credit card firm for a refund instead. 

Section 75 can help if: 

  • Your purchase is faulty or damaged – for example, you bought a new refrigerator, but it broke down after a week

  • The product is not as described – for example, you ordered a grey sofa, and arrived in the wrong colour

  • The goods never arrived

  • The retailer goes out of business before you get what you paid for – for example, a holiday firm goes closes before your trip

  • It covers anywhere in the world you have used your credit card

  • It continues to apply even if you have closed your credit card since the original purchase

For Section 75 to apply, the goods or service you have purchased on your credit card need to meet the following criteria: 

  • The item needs to cost over £100 and no more than £30,000

  • You must have used a credit card or store card to make the purchase

Of course, there are exceptions to this protection too. Purchasing land is not covered by Section 75, and neither is withdrawing cash using your credit card. 

It’s also worth noting that a friend or family member’s purchases would not be covered either since they are not the primary cardholder. Finally, credit card purchases made through an intermediary or third party such as Amazon Marketplace or PayPal might not be covered.

How to get a credit card refund

It’s always good practice to contact the retailer and ask about their refund and returns policy. Most businesses have their own policies, and this will often include refunds if you have simply changed your mind. 

Usually, you will need proof of purchase, and the item needs to be unused. If the product is faulty, you have a legal right to a full refund within 30 days.

The Consumer Rights Act does not just protect credit card purchases but also gives protection to all consumers. It applies to both goods and services. So even if you get a haircut, you still have the right to a refund.

What if you are refused a refund?

Suppose you purchased goods or services using your credit card and the retailer refuses to give you a refund. In that case, you can speak to your credit card provider. If the item was bought for more than £100 and less than £30,000, you might make a claim through Section 75 of the Consumer Credit Act. Using this, you can claim a refund, repair, or replacement. 

One of the benefits of the £100 to £30,000 rule is that you only have to pay for some of the items using your credit card to protect the total value of the purchase. For example, suppose you made a £20,000 purchase, paying for the first £1,000 with a credit card and using your savings for the rest. In that case, the whole £20,000 would be refundable to you if something went wrong. 

How to claim money back on a credit card

Once you’ve decided to claim through your credit card provider, the steps are as follows:

  • Contact your credit card provider, explaining what you purchased, where, when, how much it cost, and include proof of purchase

  • If you have already spoken to the retailer, explain their response their response was

  • If you want a refund of the purchase price, make it clear to your provider that you are making a claim under Section 75 of the Consumer Credit Act

  • Keep copies of all written correspondence, including emails

How long does a credit card refund take?

This can vary depending on a lot of factors, including your credit card billing cycle. It also depends on whether you are claiming a refund through the retailer or your credit card provider. On average, credit card refunds can take around 7 days, but they can take considerably longer. 

Retailers have their own timeframes for processing refunds. Generally, they promise to give you your money back within 3 to 5 business days. Returns processed online are known to take longer, especially if it involves shipping the item back to the retailer. 

Depending on when it’s processed, you could be waiting until the following month for your refund to appear on your credit card statement. If you’re anxious about how long your refund will take, speak directly to your credit card provider. 

Does a refund affect your credit?

A refund to your credit card does not count as making a payment towards the balance. It will also not cover any interest that has accrued. This is important to remember. You will still need to make either the minimum monthly payment or pay off the balance in full to prevent damaging your credit rating.

Refunds to a cancelled credit card

Can you get a refund to a credit card even after the card has been cancelled? Yes, as we touched on earlier, your right to a refund still applies even after you’ve closed your credit card account. By law, your refund is safe, and the money will be deposited into a holding account by the card provider. However, it can take longer than a regular credit card refund. 

Credit card disputes

What happens if your credit card provider refuses to give you a refund? Suppose you have been unable to get a refund from either the retailer or the credit card company. In that case, you can go to the Financial Ombudsman Service. 

To do this, you’ll need a letter of refusal provided by the credit card company and any evidence about your purchase and why you think you’re entitled to a refund. You have up to 6 years to make a claim to the Financial Ombudsman Service after the original purchase.

How to claim using chargeback?

If Section 75 is not applicable, like on credit card purchases under £100, you may still be covered by chargeback. 

While it is not legally protected and enforced like Section 75, chargeback is a voluntary scheme that credit card providers, including Visa, Mastercard, and American Express, have signed up to.

Chargeback can apply to refunds not eligible for Section 75, and there’s no minimum spending amount. How does it work? First, you make a claim. Then, your credit card provider attempts to get the money back from the retailer, often by reversing the transaction. There is a time limit on claims, usually between 45 and 120 days from the original purchase. A chargeback can take longer than regular refunds. 

Similarly, suppose you’ve made a credit card purchase via PayPal. In that case, you can pursue a refund through their own buyer protection scheme even though it is not covered by Section 75.

A final note on credit card refunds

If used responsibly, credit cards can be an excellent way to borrow and spread the cost of big purchases over time. They can help build a good credit score and offer lots of perks like cashback and reward points. You’ll also have the peace of mind that credit cards offer more legal protection than cash, cheque, or debit cards if things go wrong. This makes them one of the safest choices for expensive purchases.


3 June 2021