Here’s how refunds work and why it takes merchants days to credit you back on your debit card

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This article is a guide on how debit card refunds work because we must get this question a thousand times a week from our own customers and those seeking answers in our forums. Refunds are pretty much governed by the Electronic Funds Transfers Act — which allows financial institutions up to 10 working business days to decide whether or not they want to issue you that refund to begin with.

You read that right. Contrary to popular belief, refunds are almost never immediate unless you have a bank that drops money in your account the moment they get it rather than the date that it is labeled for. Banks like Radius Bank; Varo Money, and several others all have that feature but it is not common among the ordinary traditional banks many people are accustomed to see walking down the block in their city.

As many have learned the hard way and probably heard before “It takes 5 seconds for a merchant to charge your debit card but weeks to get your money back.” That very phrase isn’t actually a joke but rather the reality in the United States. Why that is is because when you use your debit card the process for charging is instant but the process for reversal or refunds is not. Refunds are at the discretion of the merchant involved though most banks still do adhere to their own processing times. Almost every bank known to the modern American takes upwards of 3-5 days to process funds on their end — unless you have a very modern bank that does not (think Varo Money; Point Bank, and so on.)

Pennywise has a full explainer for people to understand how this works and quite likely why it should be changed.

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