New Credit Card Rule: When you make purchases with your credit card, it’s not uncommon to encounter situations where you need to cancel the transaction or where the payment fails. In such cases, you’re entitled to a refund. But how does this refund impact your credit card bill?
Refund Process and Timeline
After requesting a refund, whether due to dissatisfaction with a purchase or a failed transaction, the merchant typically credits the refunded amount back to your original mode of payment, i.e., your credit card. However, the process isn’t instantaneous. It can take anywhere from five to 14 days for the refund to reflect on your credit card statement, depending on various factors such as the merchant’s policies and your credit card issuer’s processes.
RBI Guidelines for Credit Card Refunds
The Reserve Bank of India (RBI) recently updated its directives regarding credit card refunds, aiming to provide clarity to credit cardholders regarding the adjustment of refunds against their credit card bills. Here’s a breakdown of how credit card refunds are adjusted against your bill under the new RBI guidelines.
Adjustment Scenarios
- Refund within the Same Billing Cycle: If a refund is credited to your account before your credit card bill is generated for the month, the refunded amount will be deducted from your outstanding balance. This adjustment occurs before calculating the total amount due on your credit card statement.
- Refund after Bill Generation but before Payment: If a refund is processed after your credit card bill is generated but before you’ve made the payment, the refunded amount will be included in the total amount due on your statement. However, you can deduct the refund amount from the total outstanding bill when making the payment.
- Refund after Payment: In cases where you’ve already paid your credit card bill before receiving the refund, the process varies. The card issuer must seek explicit consent from you to adjust the refund against your credit card balance. If consent is given, the refund amount will be adjusted accordingly. If no consent is provided, or if you request the refund to be credited to your bank account, the refund will be processed accordingly.