What Happens if You Overpay Your Credit Card?

Usually, you use the custom amount option when you want to pay more than the minimum but less than the full balance. However,  if you still have an outstanding negative balance after six months, the card issuer is required to make a good-faith effort to refund your overpayment without any action from you. It may be easier to spend the negative balance, particularly on a credit card that you use often. New purchases will continue to reduce the negative balance, so you won’t owe anything until you’ve exhausted the overpayment and you’ve started accumulating a balance that you owe. For example, if you have a -$50 balance and make a $50 credit card purchase, your account balance will be at $0.

However, an accidental overpayment could leave you with a negative balance—also called a credit balance—that your card issuer owes you. It can be annoying to accidentally overpay a credit card bill, but it won’t affect your credit. And the credit card issuer is required to return the overpayment, so you won’t be out the money, either. This can be accomplished either with a check or deposit to your bank account, or through using the overpayment to cover new charges. When you overpay your credit card, you’re essentially pre-paying for your future expenses.

Making duplicate manual payments

And Capital One advises online that if your issuer doesn’t automatically refund your excess payment, you can write or call it to get it back. If you just leave the overpaid amount on the account, it will be treated as an account credit and used to cover any new charges up to the amount of the overpayment. what happens if you overpay your credit card bill If you have a rewards credit card, you might earn rewards in the form of a statement credit that’s applied to your balance. And that statement credit could result in a negative balance if it’s more than your current credit card balance. For example, let’s say you’ve overpaid your credit card bill by $250.

  • It may not be good or bad, but you just reduced your checking or savings balance by paying your credit card company more money than you needed to.
  • While overpaying a card isn’t common, it also isn’t as uncommon as you would think.
  • Paying the minimum payment on your credit card bill will keep your account in good standing — but it can dig you quickly into debt.
  • You’ll start accruing interest on the unpaid balance, and if you carry that monthly, you could find a few simple purchases costing you much more in the long run.
  • Bankrate follows a strict editorial policy, so you can trust that we’re putting your interests first.
  • Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.
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Rather your cash in hand is stuck in the credit card issuer’s account in case of overpayment. It can be avoided by taking simple steps and paying due attention while paying your bills. For example, money launderers sometimes use excess credit card payments to move money and make it appear legitimate. Thieves might use negative balances to cash out on “return fraud,” getting refunds from retailers on stolen items or fake receipts. Credit card companies are on the lookout for these and other kinds of fraud when processing a credit balance refund. It may not be good or bad, but you just reduced your checking or savings balance by paying your credit card company more money than you needed to.

These are the times you might want to keep a negative credit balance.

The simplest method is to let your spending increase your balance back over zero. Another option, if you don’t use your card often, is to let the negative balance roll over to your next statement. That overpayment will subtract from your new charges, resulting in a lower statement balance. Generally, if you just leave your credit card balance as is, any extra money you paid this month will automatically roll over to next month and offset that bill.

  • That means that the card company owes you money, rather than you owing the card company money.
  • One way to avoid overpaying in the future is by enabling autopay on your credit card bill.
  • We are not contractually obligated in any way to offer positive or recommendatory reviews of their services.

After all, your bank kinda owes you money, and it’s natural to want that money back. Closing a credit card account can raise your credit utilization ratio and the average age of your credit accounts — both of which contribute to your overall credit score. If you can, keep the account https://accounting-services.net/accumulated-other-comprehensive-income/ open unless the card has an annual fee that’s draining your finances. Let’s say you charge $5,000 to a card with a 20% APR, and you only pay the minimum payment until it’s paid off. Your minimum payment would start at $133.33, and then decrease each month as your balance decreases.

What To Do if You Overpay Your Credit Card?

So, whether you’re reading an article or a review, you can trust that you’re getting credible and dependable information. If you want to improve your credit score, try opening a new credit card instead. The increased credit limit will lower your overall credit utilization rate and help your score. It’s possible to send in duplicate manual payments on your credit card. If you’re wondering how anyone could make this mistake, the reason is the lag time between when you send a payment and when it processes. If you don’t use the card for six months, then the card issuer is legally required to issue a refund for the overpay.

what happens if you overpay your credit card bill

The clock starts on the date of the billing statement with the disputed charge. While credit card overpayments are usually pretty simple to clear up, they can still affect your cash flow, leaving you in financial limbo until you get things sorted out. Avoiding overpayments can save you the hassle of dealing with the aftermath.

This is the easiest option, and it works well with credit cards that you use often. If you notice an overpayment, it can be a good idea to contact your credit card issuer, particularly if the overpayment was significant. If you use autopay for your credit card bill or car insurance bill, make sure enough funds are in your connected bank account before your payment is scheduled to be withdrawn. Otherwise, you could overdraw your bank account, be responsible for overdraft fees and potentially cause a late insurance payment.

what happens if you overpay your credit card bill

However, paying down a previously high balance may give your credit score a boost. The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.


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