Quick Answer
Yes, you can get a refund on purchases made with a credit card that is later cancelled, in most cases. When you make a purchase with a credit card, the merchant has a certain period of time in which they can process the charge. If your card is cancelled before the charge goes through, it will be declined. The merchant should then refund the transaction. You may need to contact the merchant directly to ask for the refund if it does not happen automatically. The time period for processing charges varies by merchant – it is usually 1-5 days but can be up to 30 days in some cases. As long as the card was valid at the time of purchase, you are still entitled to the refund if it is later cancelled.
Explaining the Process
When you make a purchase with a credit card, there is a delay between the time of purchase and when the funds are actually transferred from your account. This is known as the authorization hold period. During this time, the merchant contacts the card network (Visa, MasterCard, etc) and obtains an authorization code that approves the transaction. However, no money changes hands yet.
The authorization hold serves two purposes:
- It ensures the merchant that you have sufficient funds or credit available to cover the transaction.
- It reserves those funds so they cannot be spent on something else before the transaction completes.
The hold typically lasts 1-5 days, depending on the merchant’s processing policies. During this time, the funds are “pending” and not fully deducted from your account. Once the authorization period expires, the merchant captures the transaction by submitting a charge request to your card issuer. This is when the funds are finally transferred.
Now, if your credit card is cancelled during the authorization hold period, the merchant will not be able to capture the transaction when the time comes. When they submit the charge request, it will be declined since the card is no longer valid.
In this case, the merchant should void out the authorization hold and refund the transaction amount back to you. The funds are released from the pending state since the transaction can no longer complete. You should see the refund deposited back into your account, or credited towards your card balance if it is a prepaid or store credit card.
Contact the merchant if you do not see the refund within a few days of your card being cancelled. They may need to process it manually, but you are still entitled to it. As long as the card was active at the time of purchase, you have not received the goods or services yet, so a refund is appropriate.
Policies of Specific Credit Card Networks
The major credit card networks like Visa, MasterCard, American Express and Discover have standardized policies that require merchants to process refunds when a card is cancelled mid-transaction. Here are some specifics:
Visa
Visa’s policy states that consumers can receive a refund for any goods or services purchased with a Visa card if the card is subsequently cancelled and the merchant receives a decline response code when submitting the transaction. This policy applies both for credit and debit cards on the Visa network.
MasterCard
MasterCard also requires merchants to void out the transaction and issue a refund when a card is cancelled before the charges are submitted. Its policy specifies that consumers are eligible for refunds on all goods and services purchased with a valid MasterCard if it is cancelled before consummation of the transaction.
American Express
American Express has a similar policy where merchants must submit a credit to refund a transaction if the card is cancelled during the processing period. Card members are eligible for refunds on all transactions made when the card was in good standing, even if issues later arise.
Discover
Discover’s policy states that merchants should promptly issue refunds for any goods or services transacted on a Discover card that is cancelled if they are unable to subsequently submit the charges. This applies for both credit and debit cards on the Discover network.
So in summary, all the major card networks have policies in place to protect consumers in this situation and ensure you can get a refund if your card is cancelled before the transaction finalizes. The merchant is required to comply with these rules.
How Long Does it Take to Get the Refund?
In most cases, you can expect to see the refund within 5-10 business days after the merchant attempts to charge the cancelled card. Here is an approximate timeline:
- Day 1 – You make the purchase with your credit card.
- Day 2-5 – The merchant places an authorization hold on the funds.
- Day 6 – Your credit card is cancelled before the merchant submits the charge.
- Day 7 – The merchant tries to charge the cancelled card and gets a decline code.
- Day 8-12 – The merchant cancels the authorization hold and issues a refund back to your account.
- Day 13-17 – The refund appears on your account or card balance.
However, this can vary based on each merchant’s specific timelines. Some may process refunds in just 1-3 days while others may take up to 30 days in rare cases.
If you have not received the refund after 30 days, reach out to the merchant to investigate. They may need to reissue the refund if something went wrong. But be patient for at least a couple weeks as refunds can genuinely take time to process depending on the merchant systems.
Steps to Take to Get the Refund
Here are the key steps to take if your card is cancelled before a merchant charge goes through:
- Contact the bank or card issuer. Alert them that you have a pending transaction that needs to be cancelled. They will cancel the card and notify the merchant it is no longer valid.
- Contact the merchant. Explain that your card was cancelled and ask them to void the transaction and issue a refund.
- Wait 5-10 business days. The refund should appear in your account automatically once they process it.
- Follow up if needed. If 10+ days have passed with no refund, contact the merchant again for status.
- Dispute if necessary. If the merchant refuses to refund, initiate a dispute with your card issuer explaining the situation.
Following these steps promptly can help expedite the process. Most merchants will comply with card network rules and issue the refund once they are aware the card was cancelled. But occasionally errors happen or further follow up is needed. With persistence, you can get the situation resolved.
Special Cases: Prepaid Cards, Store Credit, and Gift Cards
The above guidance applies primarily to standard credit and debit cards. What happens if your cancelled card is a prepaid, store credit, or gift card?
The basic process is the same:
- The merchant places an authorization hold on the card when you make the purchase.
- If the card is cancelled before they submit charges, their request will be declined.
- They should cancel the hold and refund the amount back to the card balance.
With prepaid and store credit cards, the refund just goes back to reinstating the available balance on the card itself. For gift cards, the merchant will likely have to issue a replacement card with the refunded amount.
The key is that you are still eligible for the refund per card network rules. But the way it is processed may differ depending on the card type. Contact the merchant for specifics on how they handle refunds for prepaid, store or gift card purchases when the card is cancelled mid-transaction.
Purchases Made with Multiple Payment Methods
What happens if you made a purchase using a credit card that was later cancelled, but also used other payment methods like reward points or a gift card? Here is how refunds work:
- The credit card portion will be refunded back to your account or card balance.
- Reward points used will be redeposited back into your rewards account.
- The gift card portion will be refunded by replacing the funds onto a new gift card.
You are eligible for a full refund on all forms of payment used in the transaction. The merchant will just have to process refunds for each specific method separately. Monitor your various accounts and balances to ensure you recoup any points, gift card amounts, or other payment types.
Purchases Made with Debit, ATM or Bank Cards
Debit cards, ATM cards, and bank cards linked directly to your checking account also qualify for refunds if cancelled mid-transaction.
The process works the same:
- The merchant authorizes the amount when you make the purchase.
- If your card is cancelled before they submit the charge, it will be declined.
- They must void the authorization and issue a refund back to your bank account.
One difference is that most debit purchases clear in 1-3 days, rather than the 1-5 days for credit cards. So the timeframe for getting the refund may be shorter.
Monitor your bank account balance for the refund. If not visible after 5-7 days, contact your bank and the merchant to investigate. Debit card purchases are eligible for refunds on cancelled cards just like credit cards.
Purchases Made Near the Expiration Date
Another scenario is when your credit card expires shortly after making a purchase:
- You buy an item with your card on March 1st.
- The card is set to expire on March 15th.
- The merchant tries to submit the charge on March 20th and gets a decline.
Even though the card naturally expired, the same rules would apply. The merchant needs to void the authorization and refund the transaction since they could not submit the charge on an expired card.
As long as your card was valid at the time of purchase, you are eligible for a refund if it naturally expires during the processing window. Contact the merchant regarding your expiring card and request a refund if needed.
Getting Refunds on Cancelled Cards for Digital Purchases
For digital purchases like ebooks, software, online services, etc, a refund is still required if your card is cancelled before the merchant can capture the payment.
However, access to the digital item (like an ebook or streaming service) would likely be revoked in this case since the transaction could not finalize. So consider whether you still need the content before cancelling a card mid-transaction.
If your access does get revoked when the card is cancelled, request the refund from the merchant. Per card network rules, they are still required to issue one, even for digital goods. You are not obligated to pay for content you can no longer access.
What if the Card is Cancelled Due to Fraud or Theft?
If your card is cancelled due to loss, theft, or fraudulent activity, the same refund rights apply for any pending transactions.
The key steps are:
- Report the card lost/stolen to the bank immediately and cancel it.
- For any pending transactions, ask the merchants to void the authorization and issue refunds where applicable.
- Dispute any unauthorized charges that post to the cancelled card and provide details to the bank.
For valid purchases you made, be proactive in contacting the merchants to obtain refunds when your card is cancelled due to theft or fraud. By reporting promptly, you can often recoup the pending amounts.
How Refund Timeframes Vary by Merchant Category
The timeframe for refunds on cancelled cards can vary across merchant categories. Here are some estimates:
Hotels
5-10 days for refunds. Hotels typically only authorize room and tax upfront. Extra charges finalize after checkout. Cancelling before checkout should void entire authorization.
Restaurants
3-7 days for refunds. Most restaurants submit charges within a few days. Quicker refund turnaround.
Gas Stations
2-5 days for refunds. Gas stations tend to clear transactions fastest. Refunds also very quick.
Retail Stores
7-14 days for refunds. Large retailers often have longer processing windows. Refunds take 1-2 weeks.
Digital Merchants
3-10 days for refunds. Digital content providers process charges rapidly but refunds depend on systems.
Travel Companies
14-30 days for refunds. Airlines, cruises and tours have long authorization holds. Refunds take longer.
So factor in the merchant type when estimating your refund timing. Processing consumer card transactions involves many systems interacting. Refunds require multiple reversals across networks. Hence delays occasionally happen. But persist with follow up and you can get your money back.
Recovering Funds if Refund is Never Issued
In rare cases, the merchant may be unresponsive or refuse to issue a refund after your card is cancelled pre-transaction. If persistent requests and follow up fail to resolve this, you can recover the funds by:
- Disputing the charge. File a dispute with your card issuer citing failure to receive promised goods or services. Provide documentation showing the card cancellation date.
- Reporting non-compliance. Escalate to the card network (Visa, Mastercard, etc) that the merchant violated their policies by not refunding a cancelled card transaction.
- Submitting a complaint. File a complaint against the merchant with relevant consumer protection agencies in your state or area.
- Consulting an attorney. For high-value disputes, consider consulting a consumer protection attorney in your jurisdiction for guidance.
With patience and diligent follow up, you can recover your funds if a merchant refuses to refund a purchase made on a cancelled card. This situation is rare, but recourse options do exist if needed.
Key Takeaways
Here are some key points on getting refunds when your credit card is cancelled mid-transaction:
- You are entitled to a refund per card network policies if your card is cancelled before the merchant submits charges.
- The merchant places an authorization hold on funds when you make the purchase. If the card is cancelled before this clears, they cannot complete the transaction.
- Contact the merchant promptly and request they void the authorization and issue a refund to your account or card balance.
- Allow 5-10 business days for the standard refund process, longer for large merchants. Follow up if needed.
- Dispute the charges or report non-compliance if the merchant refuses to refund a cancelled card transaction.
So in summary, act quickly when your card is cancelled to get pending purchases refunded appropriately. With diligence and patience, you can recover the amounts owed per card network policies protecting consumers.
Conclusion
Having your credit card cancelled mid-transaction can be worrying when you have pending purchases you expect to be refunded. Fortunately, card network rules require merchants to void authorizations and issue refunds if the card is cancelled before charges submit. This protects consumers from losing funds accidentally in such cases.
The key is contacting the merchant promptly when notified of the cancellation, so they can reverse the authorization hold and process the refund. Allow adequate time for this, then follow up if needed. With patience and persistence, you can recover your funds per standard policies. Just be sure to act quickly once aware the card was cancelled to avoid any delays.