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How do refunds and returns work with a credit card?

Credit card refund rules mean purchases are protected by law - Section 75 of the Consumer Credit Act 1974 gives credit card protection on your purchases priced over £100 and up to £30,000, even if you only paid a deposit by card and the rest in cash.

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How do refunds and returns work with a credit card?
How do refunds and returns work with a credit card?

One of the benefits of paying for goods with a credit card rather than with cash is that your purchases are protected by law.

This means if for some reason your goods are faulty, damaged or were never delivered to you, then you should be able to claim the money back via your credit card provider.

In some cases, you might even be able to claim back money if the seller has simply failed to honour their own customer refund policy. This rule is covered under Section 75 of the Consumer Credit Act 1974. It covers purchases over £100 and under £30,000 but it's the price of the goods, not how much you paid by card. So if you paid part on credit card and part in cash or bank transfer, you are still covered.

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What should I do if I want to return something I bought?

Firstly, you should always check the shop or seller's own refund and returns policies.

But you should also know your rights under the law. Under the Consumer Rights Act, customers are entitled to a full refund on faulty goods within 30 days.

After the 30-day period, you're still entitled to a repair or replacement for up to 6 months.

If you have simply changed your mind about a product, you have no right to a refund. Many shops obviously have their own policy on this, and usually offer some kind of refund or exchange within a certain number of days, but they're not obliged in any way to stick to it.

What can I do if a merchant is refusing a refund?

If a shop or seller is refusing to give you a refund and you think you're entitled to one, you can take them to a small claims court. This can be quite expensive, or you can refer your case to an Alternative Dispute Resolution (ADR) provider, which is usually paid for by the retailer.

The law guarantees certain rights for you but if the merchant isn't honouring those rights, then it might seem overly complicated to resolve the issue.

However, if you paid for the item with a credit card and the value of what you bought was over £100 and less than £30,000, then your credit card provider might be able to give you a refund.

They might be able to do this even if you're outside your legal rights, if you think you still have a good case for a refund. But this will then come down to the discretion of the credit card provider.

What consumer protections do I have?

The Consumer Rights Act says that goods must be fit for purpose and meet the expectations of the customers too. So if you have a particular purpose and expectations for a product, you should make that clear before purchasing. If the merchant tells you it's fit for that purpose and it fails to deliver on your expectations, then you have a right to a refund.

If you're buying services, such as a car repair or a haircut, then the Consumer Rights Act can also protect you. You have a right to a certain expectation of the quality of service you receive. It should be done with reasonable care, as agreed with the customer.

If you find a fault with a good within 30 days of purchase, then it's important to exercise your rights, and claim a full refund. After 30 days, you would still be entitled to a repair or replacement, up to 6 months. After 6 months you still have some rights, but the value of what you're owed will diminish over time.

Credit card refund rules

Essentially, section 75 of the Consumer Credit Act 1975 states, your credit card provider and the merchant you made the purchase from are equally responsible if something goes wrong.

So if the item is faulty, damaged or not delivered to you, and the merchant fails to take responsibility, the credit card provider will have to provide you with a refund.

You can claim a refund, repair or replacement so long as the price of the goods or services you purchased were more than £100 and less than £30,000.

However, the threshold figure still applies even if you only use your credit card to for part of the cost. For example, if you paid for an item worth £101, but used cash or cheque for most of it, and used a credit card for the rest, the purchase would still be protected. This is because the total value is over £100.

The total cost has to be over £100. If the item is £99, but you were charged a £1.01 service charge, for example, then the purchase would not be protected.

These protections don't exist when you pay for goods and services in full with cash or cheques, as only the merchant can be considered liable.

There are a few exceptions to the credit card protections. For example, if you used a charge card or a store card to make the purchase. This also goes for company credit cards, credit card cheques and purchases made through PayPal (even if it's tied to your credit card).

How to get a refund on a credit card

Collect as much evidence as you can from the merchant, including any proof that your expectations were clearly failed, or the purchase didn't meet a satisfactory quality that would be otherwise reasonable to expect.

Call up your credit card provider and tell them what happened, and be ready to provide details of the time of the transaction and value of the purchase, and what went wrong. They might have to speak to the merchant first and take a few days to decide, or they could simply give you a refund on the spot.

If your credit card provider refuses to offer you a refund, then you can refer your case to the Financial Ombudsman Service to resolve the issue independently. You will need a ‘letter of deadlock’ from the credit card provider, so ask them for that first.

You have up to six years after the purchase to make a claim.

How to get a refund using chargeback

If the purchase was under £100, you might still be able to claim it back via the 'chargeback' scheme. Chargebacks aren't covered under any law, so there are no guarantees and you should not necessarily expect to get your money back.

This involves getting your bank to ask the merchant's bank to give the money back. Your credit card provider or even debit card issuer (such as Amex, Visa and Mastercard) may also offer this service, so speak to them first.

When you apply for a credit card it’s important to get a card that suits your needs. Whether it’s managing debt, credit building or taken advantage of associated benefits.

Make sure you use your credit card protection when making purchases.

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