Refund or credit: when to offer each

Money back or credit with you: what each one really costs, when credit is fair and when it's a trap, how long it should last, and the words to use.

Jan 20, 2026 · 5 min read

A parent is at the desk with a cast on their daughter's arm. Sledding, the first weekend of January. They paid $540 for the winter term, four classes are gone, and they'd like to know what happens to the rest. You have about ten seconds to decide whether that's money back or credit with you, and whichever you say becomes your policy, because they'll tell the other parents.

It's worth deciding before they're standing there.

What each one costs you

A refund is simple: the money leaves, and the conversation is over. It's also the more expensive of the two in ways that aren't obvious.

Say the winter term is 12 classes at $45, paid by card. Eight classes are left, so $360 is the fair amount to return. But the card processor usually keeps its fee on the original payment when you refund, so the 2.9% + 30¢ you paid on $540, about $15.96, is gone either way. And if you refund in week five, the spot is usually empty for the rest of the term, because nobody joins a level class in week five.

Credit keeps the $360 in your account, and the family keeps a reason to come back. But it isn't free money either. It's a promise to teach eight classes later, when that spot might have been sold to someone paying full price. Credit used in your busiest term costs you a sale; credit used in a quiet term costs you almost nothing.

So the real question isn't which is cheaper. It's whether the family is coming back.

When credit is fair, and when it's a trap

Credit is fair when the family wants to return and can. An injured child who'll be back in spring, a parent whose work schedule changed for two months, a teenager who needs a term off for exams: credit is exactly what they'd choose.

Credit is a trap when it's a refusal in disguise:

• A family moving to another city. Credit they can't use is the same as saying no, and they know it.
• A class you cancelled. If the cause was on your side, a teacher leaving or a class that didn't fill, they should be able to choose. Insisting on credit here is how a studio earns its one-star reviews.
• A child who's done. The eight-year-old who cried through every class since October isn't coming back for spring. Credit just postpones the refund conversation until September, when they'll be angrier.

It can be a trap for you, too. A drawer of forgotten credits is money you've already spent and still owe. A studio with forty open credits at $200 each owes $8,000 in classes, and those families will all want to use them in September.

A simple rule for the desk

Most studios settle on something like this:

Two things make this work. First, it's written down before anyone pays, so it's a policy and not a mood. Second, you count from the classes left, not the term's price, so nobody argues about whether week one counted.

Some studios offer credit at full value and a refund less a small admin fee, say $25. That's fair if it's in your policy before the family pays, and less fair if it appears for the first time at the desk.

How long credit should last

Long enough to be used, short enough that it doesn't follow you for years. The next two terms, or twelve months, covers almost everyone: the injured child, the family away for a season, the teenager back after exams.

Write the end date on the credit itself, not just in your policy. "Credit of $360, to use by January 31 next year" ends arguments before they start.

One caution: some provinces and states limit expiry dates on prepaid amounts and gift cards, and a credit on account can look like either depending on how it's worded. Check your local consumer rules before you print an expiry date, and if in doubt, ask whoever does your books.

The words to use

For your website and registration page, one plain paragraph:

If you need to stop during a term, we'll credit the classes left toward a future term, to use within twelve months. If you're moving away, or we cancel a class, we'll refund the classes left instead. Missed classes can be made up in another class at the same level.

At the desk, when the parent with the cast asks:

"I'm so sorry about her arm. She has eight classes left, so that's $360. I can put it on your account as credit for spring, or if you'd rather have it back on your card, I can do that too. Which suits you?"

Notice what that does. It names the amount, so they don't have to ask. It offers credit first, without hiding the refund. And it lets them choose, which is what they'll remember.

By email, when someone asks after they've left:

Thanks for letting us know, and we're sorry to see you go. Leo had 6 classes left of 12, so we've refunded $270 to the card you paid with. It usually shows on your statement in 5 to 10 days. If you ever come back, his spot in Level 2 will be waiting.

Keep a list

Whatever you choose, write down each credit: the family, the amount, why, and when it ends. Look at the list at the start of each registration period, and send a short note to anyone whose credit is about to lapse. That note brings families back, and it's the difference between credit as goodwill and credit as a quiet way of keeping money.

In Caletan, families ask for a refund from the paid bill and say why, and you answer from Billing: back to their card, as credit used first on their next bill, or not at all, with a reason they see on the bill. The refunds guide shows each step.