Quick Answer
If your card is cancelled after you make a purchase that is later refunded, here’s what typically happens:
- The refund will initially go back on the cancelled card.
- Since the card is cancelled, the refund will be rejected by the card network.
- The refund will then go back to the merchant.
- The merchant will issue you a new refund through check, store credit, gift card, or another payment method.
So you will still get the refund, it just may take a little longer if the original card is cancelled. Stay in touch with the merchant to ensure you receive the new refund.
Explanation
When you make a purchase with a debit or credit card, the transaction sits in a “pending” status for a few days while it processes fully. During this time, if the purchase is refunded, the money goes back on the original card.
However, if the card was cancelled after the purchase but before the refund, the card network will reject the refund since the account is closed. The refund then goes back to the merchant.
At this point, the merchant has to issue you a new refund through a different form of payment. Here are the most common ways merchants will reissue a refund if the original card is declined:
- Check: The merchant can mail you a traditional paper check with the refund amount.
- Store credit: Some merchants will give you a store credit or gift card for the amount of the refund.
- New card: You can provide the merchant with details for a new, active card to receive the funds.
- Alternative payment method: The merchant may allow you to receive the refund through PayPal, Venmo, Interac e-Transfer, or other payment apps.
The exact method depends on the merchant’s policies. The key is staying in contact with their customer service team to ensure you receive the refund smoothly.
How long does it take?
If the original refund to your cancelled card is rejected, it typically takes 7-10 additional days to receive the reissued refund from the merchant. But the timing varies based on:
- The merchant’s refund policy and processing times.
- The method they use to reissue the refund (check, store credit, etc).
- How quickly you provide new payment details if needed.
- Any delays contacting their customer service team.
Provide any new payment information right away, and stay in touch with the merchant to smooth the process.
What causes this situation?
There are a few common reasons your card might get cancelled after a purchase that later gets refunded:
- Your credit card expires and you receive a new one with updated details.
- You report your card lost/stolen so the bank cancels it and issues a replacement.
- You close a credit card account completely.
- Your bank detects fraudulent activity on your card and proactively cancels it.
In each case, any pending transactions or recent purchases will initially try to refund to the same, now-cancelled card. This results in the refund getting rejected and needing to be reissued.
To avoid any headaches, check your pending transactions before closing or replacing a card. And don’t completely close an account until all pending activity is completed.
How can you avoid this?
While card cancellations can’t always be avoided, you can take some steps to prevent refund issues whenever possible:
- Check for pending transactions before closing or replacing a card.
- Leave accounts open until all pending activity finishes processing.
- Use the same card provider when getting a replacement card.
- Update card details with all merchants who have recurring payments set up.
- Notify merchants of new card details proactively after replacing your card.
Taking these preventative measures reduces the chances of refunds bouncing back when your old card is suddenly cancelled.
What if the merchant refuses to reissue the refund?
In most cases, merchants want to properly complete the refund since they are obligated to return your money. But if a merchant refuses to reissue the refund through an alternative method, you can take the following steps:
- Submit a formal complaint to agencies like the Better Business Bureau.
- Report the issue to your state/province’s consumer protection agency.
- File a claim against the merchant in your local small claims court.
- Dispute the charge with your card provider by submitting a chargeback request.
- Leave negative reviews about your experience with the merchant online.
No merchant wants this type of negative attention or legal action. In most cases, submitting formal complaints prompts the merchant to properly complete your refund.
Key Takeaways
– If a purchase refunds to a cancelled card, the funds are rejected and go back to the merchant.
– The merchant then reissues the refund through check, store credit, new card, or other payment methods.
– Stay in contact with the merchant and provide any new payment details to get your refund smoothly.
– Allow extra time for reissued refunds to process and complete.
– Avoid cancellations when possible by checking pending transactions first.
Conclusion
While refunds to cancelled cards can be inconvenient, consumers ultimately get their money back in most cases. The key is staying patient and working with the merchant to receive the refund through alternate means. Allow extra processing time, provide new payment details promptly, and politely follow up as needed. With good communication, you can ensure a smooth refund even when your original card is suddenly cancelled after the purchase.