When the fever of the season goes away, what may be left over (besides a few Christmas cookies) is a tinge of buyer’s remorse to go along with some hefty credit card debt. Maybe you bought your niece an iPod only to find out four days before the holiday that she owns one already. Or perhaps you bought your nephew the first book in the Wimpy Kid series only to discover he’s read all six.
Not only are you faced with the prospect of standing in long lines to make a return, but if you bought the items with your credit card, you won’t even get the satisfaction of an immediate refund. Refunds for purchases made with credit cards are credited back to the credit card company. While this will, in the long run, help lower your balance on your credit card, there are a few things you should understand about credit card refunds.
- The refund will reduce the balance of the credit card, but it will not be considered a payment. You will still be required to make your monthly payment to avoid any blemishes on your credit score.
- The refund may take a few weeks to process, so even though it will reduce your overall balance, it may not happen in the same month that you made the return to the store.
- Returns will not have much of an impact on your credit score. So many different factors contribute to your score that returning items for a refund will not dramatically impact your score.
The exception to the rule…
If your credit card in the primary source of your debt, and you have used more than 50% of the available credit on the card (or cards), returning big-ticket items that bring the balance down below 50% could make some difference in your credit score.
The better plan, however, is to start early on next year’s holiday shopping. Not only can you get great deals on post-Christmas sales, but by planning early, budgeting carefully, and spending wisely, you can give yourself the best possible gift for Christmas 12 months from now: less debt and a better credit score.