Welcome:
The part about the t-shirts being washed before they were made sounds odd to me. Also, the first sentence doesn't make sense; if it's from something, then it needs to be to something as well.
Payments:
Do you accept gift cards? I think if you take Etsy direct checkout that you accept gift cards. I would explain that you accept all major credit cards via Etsy direct checkout or Paypal. Some people may not know that by accepting payments from Etsy you are accepting credit card payments.
Shipping:
What time zone are you in? It's nice that you give a time, but there is no timezone, so that doesn't help me. Also, I don't know that you should give a time that you'll make it to the post office, because things happen. What if you're out of town when an order comes in? You may not make it back to your house in time to make, package, and ship an order that was placed on Friday by Saturday at 11 am.
Do you not offer shipping upgrades through your shipping profiles? What all locations do you offer upgrades for?
Are tracking numbers only available on upgraded shipping?
Refunds:
I would expand on the refunds for digital orders. Something along the lines of "due to the nature of digital orders...".
Yelling at customers is not nice, and all caps is the internet version of yelling. To emphasize numbers, I would either put it in parenthesis after the spelled out word "one (1)" or use something like "one and only one".
If you're offering one "redo", I would define redo. Do you mean if I order a custom shirt from you, and my kid grows two inches before I receive the item, I can send it back and you'll send me a new larger one? Or do you mean you'll send me a digital proof and I can have you fix some spelling error or something before the item is actually created?
I would definitely remove the part where you say you might not notice damage to their items! That to me as a buyer would be a red flag that told me I should not buy from you.
Your policies should make anyone who actually takes the time to read them feel like you appreciate them taking the time to read through your policies. As you probably know, most people don't have that kind of attention span unless they are really interested in something. So, make sure they know that you will appreciate them as a customer, but make your wording firm and make sure it explains clearly any policy that you want to be able to enforce.
