Cancelling a credit card may feel empowering, but it can come with a number of complications. You must change or also cancel all automatic payments going to that account and your payees will surely remind you of that. But one other complication occurs if you have cancelled the card and then a merchant decides to refund a payment.
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Cancelled Credit Card
When you cancel a credit card, you can no longer add new transactions directly related to the card to the account. The credit card number is no longer valid. So that means you cannot submit balance transfers, charges at stores or cash advances against the previously available limit. The only transaction you can submit is a payment to reduce a leftover balance on the account.
Since the card account is cancelled and no longer in existence, the credit card merchant may have issues submitting a refund to the account. Merchants have virtual or electronic terminals that allow them to reverse transactions directly to the same credit card number. If the card is inactive, the merchant will likely either receive a notice from his merchant services provider instantly or after a few days informing him of the invalid credit card account number.
In other cases, the credit card company may accept the refund as a payment credit on the account. If the credit card was cancelled even though you still carry a balance on the account, the creditor may still a charge reversal to lower that balance as if it were a payment to the account. In this case, the creditor may just accept the refund submission even though the account is closed. If the account doesn't have a balance and the creditor accepts the refund for some reason, you must call the credit card company directly to request a check payment. It is more likely that a credit card company would accept the refund request on an account that was closed recently.
In either case, just call the merchant well in advance of the credit to request a check instead of the refund to your old credit card account, if you're concerned. However, the merchant may charge a fee for cutting a check and ask for verification of the correct address for sending the payment. Another option is to simply ask for a refund to another credit or debit card account.
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