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What Happens if You Overpay Your Credit Card?


The majority of Americans have credit cards and utilize them regularly. When paying your credit card balance, sometimes an overpayment on your account can happen, and people are left wondering, “What happens if you overpay your credit card”?

This article will explain what an overpayment is, why it happens, and what to do about it.

What is an Overpayment?

An overpayment is when you, the cardholder, have overpaid on your balance and therefore have a negative balance.

For example, if you had an account balance of $100 and accidentally paid $110, you would have an overpayment of $10.

What Happens if I Overpay My Credit Card Balance?

First of all, don’t panic! An overpaid credit card is a common scenario, and not much happens if you have a negative credit balance.

If you do overpay your credit card, you will likely have a credit on your account. After this happens, you can do one of two things:

  • Spend down the negative balance
  • Request a cash-back refund, which will likely be issued in the form of a check

The quickest and easiest way to take care of a negative credit card balance on your account is to buy something for the amount you overpaid.

For example, if you have a $10 overage from your last credit card payment, you could purchase something for $10 to bring your current balance to zero.

The other option is to request a refund in the amount of the overpayment from your card issuer.

This may take time, but most credit card companies have a policy in place stating that refund requests must be processed within a certain number of business days. Federal law also dictates how long a card issuer has to issue a refund.

How Do Overpayments Happen?

Overpayments to your credit card account can happen for a variety of reasons.

According to Chase, the largest credit card issuer in the United States, here are the top reasons for overpayment.

  • Automatic payments: Many people set up automatic payments so they don’t forget their due date, which is brilliant, but this can sometimes lead to overpayment. If you decide to make a manual payment and have forgotten about your automatic payments, it could result in a negative balance.
  • Refund from purchases: This can happen if you buy something with your credit card, pay off the balance, and then return the item to the store. You’ll technically have a negative balance because you paid off your credit card, and then the store refunded your credit card.
  • Statement credit: Your credit card may offer you points or rewards in statement credits, which can lead to a negative balance. Typically you would have to manually accept any cash-back reward and then actively opt to apply it toward any balance due. But this scenario, where the reward is auto-applied, can happen.
  • Charge reversal: If you disputed a charge but, in the meantime, paid it off, this could result in a negative balance once the charge is removed or reversed from your statement.

Keeping a close eye on your credit card statements and online account can ensure you know your balance and how any returns, refunds, or statement credits will impact it.

How Do I Prevent Overpayment?

There are a few ways to prevent overpayment.

  • Set up autopay for your minimum account balance on a specific day of the month. (You could set it up for the balance in full, but paying the minimum will keep your account current and give you a chance to review new purchases on your statement before you pay them.)
  • Regularly check your account balance via your online banking app or website to ensure the most recent account balance.
  • Double-check payment amounts before submitting to ensure you didn’t transpose (fat finger) a number.
  • Stay on top of your personal finances with a budgeting app or an app to track your credit card spending. You’ll get prods (alerts) for what’s due when — like the minimum amount due next month on your American Express.

Will Overpayments Hurt My Credit Score?

No. But overpayments can be a red flag to credit card lenders so it’s best to avoid having a negative balance.

Generally, consumers want creditors to extend them a line of credit and not the other way around, so overpaying can look fishy.

Will My Credit Card Company Increase My Credit Limit?

They certainly can. However, they will not likely increase your card limit as a result of an overpayment. If you want a higher credit limit, you can ask them directly. Most credit cards are happy to extend more credit — provided you have demonstrated creditworthiness.

In general, credit cards want you to spend more. They make money off your credit card debt through interest charges. But less cynically speaking, the best credit cards want to keep their customers happy and make sure they have access to the lines of credit they need.

Your credit card company may decide to increase your credit limit without you formally requesting it, or you can request a credit limit increase over the phone, online, or in person.

The decision to increase one’s credit limit depends on several factors.

Capital One, one of the largest credit card companies in the United States, looks at these variables when considering a credit limit increase.

  • Payment history: Are you on time or do you have late payments? Or missed payments altogether? What is the status of your bank account? Have you filed for bankruptcy or had any wage garnishment orders?
  • Current accounts: What is your current account status? How many bank accounts do you have open? How many open loans do you have? What types of loans are they? Are they secured lines of credit, or credit cards maxed out to their full balance?
  • Account history: How long have you been a customer of this institution? Have you opened and closed a lot of accounts?
  • Credit utilization ratio: This is how much you use divided by the total credit available. According to Equifax, no more than 30% of your total revolving credit should be used. This means that for $10,000 in total lines of credit, the combined balances should not exceed $3,000.
  • Income: Do you make enough money to pay the bills?

Credit card issuers will review all five of these factors in determining if they will issue a credit increase.

Again, making an overpayment will not increase your limit. If you want to use a credit card to fund a large ticket item and you do not have a high enough limit, your best bet is to ask directly for an increase or to use a prepaid credit card.

Does My Credit Utilization Ratio Affect my Credit Score?

Yes. Your credit utilization ratio is one of the key factors used in calculating your credit score. If individuals have too high a ratio, they may ask their banking institution for a credit increase to lower their credit utilization ratio.

Although this will give a slight ding to your short-term credit, it can help your long-term credit score.

A good understanding of your credit card usage and what’s on your credit report will help ensure your credit score remains high and you have a healthy amount of available credit.

Will My Credit Card Issuer Automatically Refund any Negative Balance?

Yes, but it may take several months.

According to the Consumer Financial Protection Bureau (CFPB), which is part of the United States government, your credit card company must make a good faith effort to send you a refund after six months — even if you have yet to request a refund.

Per law and the CFPB, “This can be rectified by cash, check, money order, or credit to a deposit amount of the consumer. No further action is required if the consumer’s current location is unknown to the creditor and cannot be traced”.

What if I moved?

If your contact information has recently changed, ensure your credit card company has any updated information so their good faith efforts can be fulfilled.

This is also important because you want to ensure that your credit card bill goes to the correct address and that your personal information does not go to someone else.

Can I get a refund sooner than six months?

Yes! You can request a refund sooner than that by calling and letting your card issuer know you want a refund of your overpayment. Some credit card institutions can handle refund requests online or through the banking app.

Anecdotally, I have had overpayments on my Capital One statement balance before (to the tune of $65), and without request, a check was issued for the overpayment within 2 billing cycles. But again, this is not what is required by law.

The Consumer Financial Protection Bureau requires credit card companies to “Refund any part of the remaining credit card balance within seven days from receipt of a written request from the consumer.”

What Should I Do if I Accidentally Overpaid My Credit Card?

You may not need to do anything — especially if it’s for a relatively low amount of money like $50 or less.

  • You can wait up to 6 months for the creditor to issue you a refund.
  • You can spend the overpayment — which may happen naturally over the course of your regular spending activity.
  • You can contact your creditor to ask for a refund or specify you want those funds to get applied to your next minimum payment.

If the overpayment is for a larger sum (i.e., you accidentally paid your $9,800 account balance twice), contact your credit card company right away as that overpayment may look like fraud activity.

Tip: Check your online banking app to know the exact balance of your account so you can pay it down to zero.

Why Could an Overpayment Look Like Fraud?

Overpayments have been used in money laundering schemes, so frequent or significant overpayments can flag your account for fraud. If this happens, your credit institution could freeze your account or even close your credit card in some situations.

In the event of frequent or large amounts of overpayments, you may be asked to provide more information to your credit card company as to why it happened so they can determine the risk or likelihood of illicit activity.

While this is unlikely to happen if you overpay once or twice by small amounts, it is something to be aware of.

If you are worried about your account being flagged for fraud alerts, call your credit card company and explain the mistake.

Bottom Line

Although it may feel like a gut punch to have accidentally overpaid your credit card balance, it is usually just fine, and no action is needed.

The quickest way to take care of a negative credit card balance is to utilize that credit on a purchase. Or you can request a refund from your issuer to correct the overpayment.

Keeping a close eye on your credit card bill is essential to prevent overpayments, know where your credit limit is, and have a guidepost for your general financial health.

Grant Sabatier is a co-founder and CEO of MMG Media Group, which owns MoneyCrashers.com Grant is also the Creator of Millennial Money and Author of the International Bestseller Financial Freedom (Penguin Random House), which has been translated into fifteen languages. Dubbed the “Millennial Millionaire” by CNBC, Grant went from $2.26 to a millionaire in 5 years, reaching financial independence at the age of 30. Grant has been featured in The New York Times, The Washington Post, NPR, BBC, CNBC, Forbes, Business Insider, Money Magazine, The Wall Street Journal, Marketwatch, the Rachael Ray Show, and many others. He cares passionately about sharing his story to inspire others to build a life they love, reminding everyone that time is more valuable than money, and building cool stuff.
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