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What Is Store Credit and How Does It Work? [2022 Guide]

Written by, Alex Bosnjak

Updated May, 8, 2022

Store credit is a way to handle refunds. But what is store credit, and how does it work? I’ll answer in this blog post.

In addition, I’ll talk about different types of store credit and the pros and cons for businesses and consumers. 

What Is Store Credit? 

Store credit is a balance applied to your account after returning an item. The amount of the credit depends on the item’s price and purchase date. 

For example, let’s say you buy a shirt for AU$30 and return it two weeks later. The store will give you less than AU$30 in store credit. However, if you wait too long to return an item, the store may not offer you any store credit for it. 

How Does Store Credit Work? 

Now that we know what store credit is, let’s talk about how it works. 

When you return an item to a store, the sales associate will ask if you want a refund or store credit. 

If you choose store credit, the sales associate will give you a printout of your store credit balance. And, the next time you’re in the store, you can use that store credit to buy anything you want. 

You can use the store credit for anything in the store, including sale items. Some stores will also let you use the store credit to buy gift cards. 

Types of Store Credit 

There are two types of store credit: physical and digital. 

  • Loyalty Rewards –  Many stores have loyalty rewards programs that give a store credit, discounts and coupons for making larger purchases. For example, you may get AU$20 in store credit for every AU$200 you spend. 
  • Gift Cards – Gift cards are store credit used at a specific store or group of stores. It’s similar to gift vouchers. For example, you may have a Visa gift card that can be used anywhere Visa is accepted.  
  • Store credit cards –  Some stores offer their own credit cards so their customers can pay in instalments. With a store credit card, you can only use the credit at that specific store.
  • Returns –   As I’ve mentioned before, store credit is often given for returns. So, when you return an item, you can choose to receive a refund or store credit. 
  • Exchanges –  Store credit is also provided for exchanges. For example, if you bought a shirt that’s too big and you want to exchange it for a smaller size, the store would print out your balance and then you’ll be able to buy something within the same price range.

Pros and Cons of Store Credit for Businesses

Let’s go over beneficial things for retailers.


  • A convenient way to decrease refunds. 
  • Consumers can use gift cards for birthday gifts.
  • Store credits can encourage consumers to spend more. 


  • Consumers may forget they have store credit. 

Store Credit Advantages and Disadvantages for Consumers

Lastly, read about the consumer perspective of store credits.


  • Customers can buy anything in the store, including items on sale. 
  • Some stores will let you use store credit to purchase gift cards. 


  • You may forget you have store credit and never use it. 


Store credit can be a good way for businesses to handle exchanges. However, consumers can have difficulties keeping track of store credit, and they may forget they have it. Also, store credit may encourage consumers to spend more money than they would if they were using cash. 


What does store credit mean? 

Store credit is a type of credit that can be used to buy anything in the store. 

Is store credit the same as a refund? 

No, store credit is not the same as a refund. A refund is when you get your money back, and store credit is when you get credit to use at the store. 

How do I use store credit? 

To use store credit, you will need to ask the sales associate for a printout of your store credit balance. Then, you can use that store credit to buy anything in the store.

What is store credit example? 

When you return an item to a store, the store gives you a printout of your store credit balance. Then, you can use that store credit to buy something.