What is the difference between a refund and travel credit?

A refund returns money to the payment method used for the ticket; a travel credit or voucher keeps value with the airline for a later booking. The difference decides whether a disrupted trip produces money or a promise of future travel, and it depends on jurisdiction: EU Regulation 261/2004 requires ticket reimbursement within seven days by cash, electronic bank transfer, bank order or cheque, and allows travel vouchers only with the passenger's signed agreement [2]. The US Department of Transportation's consumer guide describes refunds back to a credit card, and says airlines may offer vouchers in place of denied-boarding compensation while an involuntarily bumped passenger may insist on a check [1].

Facts checked: 18 October 2026

Refund vs travel credit
Categories	Passenger rights, payments
Also called	Cash refund vs voucher, refund vs transportation credit
Jurisdictions covered	European Union, United States, United Kingdom
EU instrument	Regulation (EC) No 261/2004, in force 17 February 2005 [2]
Data source	Official programme pages

All terms

Key takeaways

In the EU, a cancelled flight gives the passenger a choice between reimbursement within seven days, re-routing at the earliest opportunity, and re-routing later at the passenger's convenience, subject to seat availability [2].
EU ticket reimbursement and Article 7 compensation use the same payment methods: cash, electronic bank transfer, bank order or cheque, or travel vouchers and/or other services only with the passenger's signed agreement [2].
In the US, the DOT guide says airlines are not required to compensate passengers for domestic delays or cancellations, but a refund may still be due on a refundable fare or where the airline cancelled and the passenger did not travel [1].
A schedule change is not automatically a cancellation: the EU regulation defines cancellation as the non-operation of a flight that was previously planned and on which at least one place was reserved [2].
A voluntary change falls outside the EU regulation's list of triggers, and the DOT guide says most discount fares are non-refundable if the passenger cancels [2] [1].

Refund versus credit

A refund is money returned; a travel credit is future travel value. The EU regulation separates reimbursement of the ticket from compensation for the disruption, and routes both through the payment methods in Article 7(3) [2]. That is why vouchers are not the default for either [2].

For a cancelled EU flight, reimbursement covers the full ticket price for parts of the journey not made, and for parts already made if the flight no longer serves the passenger's original travel plan, plus a return flight to the first departure point where relevant [2].

In the US, when a refund is due, the airline must forward a credit to the card company within seven business days of a complete refund application, though it may take a month or two to appear on the statement [1]. That is a processing rule, not a standalone refund right [1]. The DOT guide also tells passengers offered a free ticket or transportation voucher to ask how long it is valid and whether blackout periods apply [1].

When a cash refund is mandatory

European Union. Regulation (EC) No 261/2004 entered into force on 17 February 2005 [2]. It covers passengers departing from a Member State airport, and those flying from a third country to a Member State on a Community carrier unless they already received benefits or compensation and assistance there, provided they have a confirmed reservation and check in as required [2]. It excludes free or reduced fares not available to the public, but covers frequent flyer tickets [2].

Cancellation triggers a choice of reimbursement within seven days, re-routing at the earliest opportunity, or later re-routing subject to seats [2]. A delay of at least five hours triggers the reimbursement option in Article 8(1)(a), and denied boarding triggers Article 8 assistance [2].

United States. Most discount fares are non-refundable, so a passenger who cancels will not get money back; the ticket may be applied to another trip, possibly with a steep fee [1]. A refund is due on a refundable fare, and on a nonrefundable fare where the airline cancelled and the passenger did not travel [1]. Airlines are not required to compensate passengers for domestic delays or cancellations [1].

United Kingdom. The UK Civil Aviation Authority states that consumers have important legal rights when a booked flight is delayed or cancelled [3]. Its page does not set out refund, voucher or effective-date rules [3].

When a credit may replace cash

EU. Travel vouchers and/or other services may be used for Article 7 compensation only with the passenger's signed agreement [2]. The same payment rule applies to ticket reimbursement [2], and the regulation bars the contract of carriage from limiting or waiving these obligations [2].

US oversales. For involuntary denied boarding, airlines may offer free tickets or dollar vouchers instead of a check, but the passenger may insist on a check; cashing the check or accepting the free flight will probably end further claims [1]. For volunteers, DOT has not mandated the form or amount of compensation, and carriers can negotiate with passengers for mutually acceptable compensation [1].

Exceptions and limits

Extraordinary circumstances (EU). The airline is not obliged to pay Article 7 compensation if it can prove the cancellation was caused by extraordinary circumstances that could not have been avoided even if all reasonable measures had been taken [2]. The Article 8 choice of reimbursement or re-routing is listed separately in Article 5(1), before the compensation condition [2].
Short-notice cancellation (EU). Compensation under Article 7 is not due if the passenger was informed at least two weeks before departure, or within the two-week-to-seven-day window and offered re-routing within specified arrival limits, or less than seven days before departure and offered re-routing within tighter limits [2]. Those thresholds affect compensation, not the Article 8 refund-or-re-routing choice [2].
Schedule change. The DOT guide says airlines do not guarantee their schedules, and it does not set out a separate refund rule for a schedule change [1]. On the EU definition, cancellation means the non-operation of a flight that was previously planned and on which at least one place was reserved; a flight that still operates at a different time does not meet that definition [2].
Voluntary change. The EU regulation's stated triggers are denied boarding, cancellation and delay; a voluntary change of travel plans is not one of them [2]. In the US, most discount fares are non-refundable if the passenger cancels [1].
Foreign-currency tickets. The DOT guide notes that tickets purchased overseas in foreign currency can sometimes be refunded only in that currency and country because of foreign government monetary restrictions [1].

Sources

Sources accessed on 18 October 2026. It covers EU Regulation 261/2004, the US Department of Transportation consumer guide and the UK Civil Aviation Authority's flight-delay page. No airline loyalty programme's own refund policy, package-travel rules or jurisdictions other than these three are covered here.

US Department of Transportation, Fly Rights: A Consumer Guide to Air Travel, checked 18 October 2026
Regulation (EC) No 261/2004 on compensation and assistance to air passengers, checked 18 October 2026
UK Civil Aviation Authority, Flight delays and cancellations, checked 18 October 2026