By Erin Hurd
Have you ever overreacted when shopping and then felt guilty about coming home with your luggage? (Neither do I.) Either that button-down shirt you bought for your brother doesn’t fit him, or the rug you bought doesn’t match the painting in the room when you see him in place.
In most cases, you can return the item and get your money back, as long as the retailer’s policy allows it and you are within the allowed return period.
But if you paid for the purchase using a reward credit card, what happens to your points when you receive a refund? Well, you will probably return them too.
Rewards and Returns
When your credit card is refunded for the return, the points, miles or cash back you earned on that purchase will be deducted from your rewards balance. This includes any bonus rewards you may have earned.
Say you bought a TV at Walmart (WMT) – Get report in late December with a card that had Walmart as a quarterly bonus category. You earned 5% cash back for the purchase, instead of the normal 1%. Now, let’s say that a few weeks later, in January 2021, you return the TV. All the cash back you earned on the purchase will be subtracted from your rewards balance – all 5%, although Walmart is no longer a 5% category.
The refund credit will likely appear in your credit card account in a few days, but you may not see the rewards disappear immediately. It may not happen until the closing of your monthly statement.
Many credit card issuers now have targeted offers that can be added to your card as a coupon, where you get an automatic credit statement to spend a certain amount on a specific retailer. If you took advantage of one of these offers, as a Chase Offer (JPM) – Get report or Amex (AXP) – Get report Offer, this credit will likely be reversed when you refund the purchase. In addition to losing the rewards you earned for the purchase itself.
One way to keep your rewards
There is a way to retain the rewards you earned on a purchase, even after making a return: get store credit instead of having a refund applied to your card. As far as your issuer is concerned, the money is still being spent at the retailer, so you can keep the rewards.
Of course, your money will be tied up in that store. If it’s a place where you shop regularly, you’ll have plenty of opportunities to use store credit. Otherwise, you probably won’t want to be stuck with credit there instead of having your money back to use elsewhere. In that case, it makes sense to give up the rewards.
When a refund can be devastating
The disappearance of rewards due to a refund can be a drag. But if a refund causes you to fall below the spending requirement for a huge sign-up bonus, it can be totally disastrous.
Let’s say you receive a new travel card that offers a bonus of 60,000 points for spending $ 4,000 in three months. You put all of your spending on the card to meet the requirement and put it under control.
So, you decide to return some pairs of jeans that you bought on a whim. The $ 100 refund arrives on your credit card, and when the statement closes, you are $ 100 below the required amount, so you will not receive a bonus.
Perhaps worse, a bonus could even be revoked after it was granted. If you meet the spending requirements for the new credit card and claim the bonus, but then return a purchase that placed it at the top, the issuer can withdraw the bonus points you received. If you have already redeemed the points, you will see a negative point balance on your statement. All the rewards you earn on the card will go to “pay” the bonus, and it may be a long time before you are back in the blue.
Talk about a bore.
More from NerdWallet
Erin Hurd writes for NerdWallet. Email: email@example.com.