Most payments to your credit card bill are entered as transfers from a bank account (asset) to the credit card account (liability). When you pay the monthly bill, you are withdrawing money from a bank account to pay down the credit card balance. This transaction decreases both your bank account balance and the amount of credit card debt you owe.

When you return a purchase, you receive a refund on your credit card. This is another type of payment in that it decreases the amount of credit card debt you owe. If you recorded the original purchase transaction as a transfer from the credit card account to the expense, you now simply reverse that transaction: transfer the money back from the expense to the credit card account. This transaction decreases both the expense account balance and the credit card account balance. For example, if you originally recorded a credit card purchase of clothing, the transaction is a transfer from the credit card account to the clothing expense account. If you then return that clothing for a refund, you simply transfer the money back from the clothing expense account to the credit card account.

	Note
	A common mistake is to enter a refund as income. It is not income, but rather a "negative expense". That is why you must transfer money from the expense account to your credit card when you receive a refund.