Reader tip: Getting a refund even after your credit card is canceled

We recently learned that U.S. Customs and Border Protection is refunding canceled Trusted Traveler application fees for New York state residents. Related to this news, a few readers wrote in asking how to get their refund if the card they'd used to pay for the application fee has since been canceled.

These readers obviously shouldn't expect a refund if they applied using a credit card that already reimbursed their Global Entry or TSA PreCheck application fee as a benefit of card membership. But, assuming the application fee wasn't already reimbursed, let's consider the broader question of:

What happens when a refund is issued to a canceled credit card?

Unfortunately, there isn't a straightforward answer to this question, as the answer in your specific case will depend on the specific card issuer, whether the account is closed, how long the card account has been closed, whether you have other accounts with the issuer and potentially other issues. So, let's dive in.

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If your card is canceled but the account is open

If your card was canceled but your account was not closed -- perhaps because you lost the physical card or had fraudulent transactions that caused the issuer to send you a new card -- then you shouldn't have a reason to worry. The merchant can issue a refund to your canceled card and the refund will appear on the account associated with your new card.

Related reading: How I learned that my credit card number was stolen

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Ask the merchant to issue the refund in a different manner

If you're expecting a refund, perhaps for a returned item or canceled membership, then your first step should be to ask the merchant whether the refund can be issued in a different form. Some merchants may be willing to offer a gift card, store credit, cash or even issue a refund to a different credit card. If you're able to get your refund issued in a different form than your original form of payment, you can avoid a good bit of hassle.

Related reading: When returning an item for store credit, do you still get to keep the points?

See if the refund was accepted by the issuer

If you're unable to speak with the merchant before the refund is issued or the merchant refuses to issue a refund in a form different than your original form of payment, then the merchant will attempt to issue the refund to your closed credit card account. If your account was closed recently, the card issuer will likely accept the refund.

If your online account is still active, you can login and see this transaction once the issuer accepts the refund. Once the refund posts to your closed credit card account, you can call the bank to request a refund check for the balance. Otherwise, the steps required to get your hands on your money vary.

Although you may see the credit automatically applied to a different account with the same issuer, sent to you as a check or deposited in your linked bank account, it's usually a good idea to call the number on the back of your now-closed card and inquire about how to get the funds. Some issuers will require that you send a written request, but most will accept a request over the phone.

If the merchant says they sent the refund to your closed card but the credit card issuer claims they can't access it, you may want to ask the merchant to provide you with the Acquirer Reference Number of the transaction. Once you provide this reference number to the credit card issuer, they should be able to quickly find the transaction.

Related reading: What to do before you close a credit card

Go back to the merchant if the issuer rejected the refund

Although relatively rare, the card issuer may reject the refund since your account is closed. In this case, you'll need to reach out to the merchant to request a refund in a different format. The merchant should be able to see that the refund transaction was bounced back, likely in the form of a positive chargeback or generic deposit. However, as you can imagine, getting your refund from the merchant may be a long, frustrating process.

Related reading: Should I cancel my credit cards if I don't use them anymore?

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