Anticipating a Substantial Refund from a Credit Card Purchase?

Chances are, you’ll be receiving a refund soon, given the widespread cancellations happening right now. It might be a modest refund, akin to the price of a mid-tier concert ticket. Alternatively, it could be more substantial, such as refunds for season tickets to a sports season postponed indefinitely. Or perhaps it’s a sizable refund, encompassing the expenses of a lavish family vacation—covering flights, hotel accommodations, theme park tickets, and more. With such events either postponed or outright canceled, the upfront payments you made will soon be returned to you.

On one hand, this is undoubtedly beneficial. You may find yourself in need of the cash at the moment more than you require summer festival tickets. However, if you practice responsible credit card usage and avoid carrying a monthly balance, these refunds might be less thrilling. Typically, these refunds are applied as credits against your credit card balance by default. If you’re carrying a significant balance, this credit can help inch you closer to eliminating your credit card debt. But what if your balance is already at zero?

Having a negative balance of thousands of dollars on your credit card won’t assist you in paying this month’s rent or purchasing groceries. If you’re anticipating a refund exceeding $1,000, it might be wise to simply request your credit card company to issue you a check instead.

Thanks to the Truth in Lending Act, there are some lesser-known regulations that come into play in situations like this. If you find yourself with a significant negative balance on your account due to a refund, reach out to your credit card company. Specifically request that they refund that negative balance to you. They are obligated to respond within seven days.

The process is relatively straightforward. Simply dial the toll-free number on the back of your card to connect with the appropriate representative. Some credit card companies also offer this option through their online account management portals. Then, patiently await the arrival of the refund check in the mail. Once it arrives, you can use it for whatever you deem most essential—whether it’s rent, other necessities, or simply stashing it away in a savings account for future use, perhaps for that trip once the world returns to normalcy.

As mentioned, it’s typically only worthwhile to pursue this process if the refund is notably substantial. After all, it’s easy to deplete a $500 account credit within a month’s time. A few trips to the grocery store, a tank of gas, and some online purchases can easily eat away at that balance. However, when dealing with much larger sums, it’s often preferable to have the money in your own pocket rather than being held by a credit card company.

There’s one scenario, though, where it might be prudent to disregard the advice in this article. If you happen to have a particularly generous credit card rewards program, you might want to consider maintaining a large negative balance. This way, you can charge all your expenses to your credit card until the balance returns to zero, thereby accruing valuable points or miles along the way.