What Happens if You Overpay Your Credit Card Bill?

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Learn how paying more than you owe affects your finances.

Paying a credit card bill is usually a simple process. You log in to your online account, choose whether you'll pay the minimum, the statement balance, or another amount, and you submit the payment. You can also use automatic payments to make this even more convenient for you.

There are, however, situations when consumers end up overpaying credit cards. Since overpayment situations like these aren't common, it's natural to wonder what will happen to the money.

Here's everything you need to know about overpaying a credit card bill, from how it happens to how you can get your money back.

What happens if you overpay your credit card bill?

If you overpay your credit card bill, the excess amount will remain on the card as a spending credit, also known as a credit balance, that you can use. Most card issuers list the credit amount as a negative balance on the card.

Let's say you have a $500 balance on your credit card. You accidentally make two $500 payments. The first payment takes your balance to $0, and the second takes it to minus $500.

Although a negative balance on your credit card bill may look strange, there's no need to worry. Any charge you make will be deducted from the overpay amount. Continuing the example above, if you made a $100 purchase with your card, it would result in a new balance of minus $400.

If you don't use the card for six months, then the card issuer is legally required to issue a refund for the overpay.

How does overpaying a credit card happen?

Overpaying a credit card typically occurs due to one of the following reasons:

  • Receiving a refund after paying the credit card bill
  • Making duplicate manual payments
  • Making both an automatic and manual payment
  • Providing an incorrect payment amount

Receiving a refund

When you receive a refund for a purchase you paid with your credit card, the refunded amount goes back on the card. That can lead to an overpayment if you've already paid off the purchase.

For example, you make a $100 purchase on the 5th of the month and pay off your credit card bill on the 15th. The purchase doesn't work out, so you get a refund on the 20th. That $100 payment would go back on your card and lead to a credit balance.

Making duplicate manual payments

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.

Credit card payments can take a few days to process. During that processing time, your online account may not reflect the payment. If you send in a payment on the 1st and check your account again on the 2nd, the balance could look the same.

For those of us who are forgetful at times, it's easy to mistakenly send in a duplicate payment this way. One way to avoid this is to set up automatic payments, which are also a good way to ensure you don't miss a credit card payment. Another is to check your most recent payment confirmation emails before making any new manual payments.

Making both an automatic and a manual payment

Automatic payments typically won't go through if you've already paid your credit card bill. But once again, that lag time during payment processing could lead to an overpayment.

If you make a manual payment a few days before an automatic payment is scheduled, the manual payment may not process in time to stop the automatic payment.

Providing an incorrect payment amount

A mistake on a payment amount can happen whether you pay your bill online or by check.

When you pay a credit card bill online, you have the option to enter a custom payment amount. If you go that route and enter more than your card's balance, either by mistake or because you don't completely understand your credit card statement, then you'll overpay your bill.

The same is true if you pay by check and you write the incorrect amount.

What can you do if you overpay your credit card?

Your two best options after overpaying a credit card are to use the credit balance or request a refund.

If it's not a large overpayment, then you may just want to use it by continuing to make purchases with the card. This is the easiest option, and it works well with credit cards that you use often.

If you overpaid by quite a bit or you don't use the card much, you should request a refund. You can do so by calling the number on the back of your credit card. The card issuer will either issue a refund to the payment account or send you a check. This shouldn't take longer than seven to 10 business days, and it's often done much more quickly.

The one thing you shouldn't do is keep a negative balance on your credit card. There's no benefit to letting a credit card company hold on to money that could be earning you interest in a bank account.

What about overdraft fees?

The biggest issue with overpaying a credit card is that it can result in an overdraft on your bank account if you don't have enough funds to cover both payments and don't have overdraft protection.

Start by contacting both your credit card company and your bank as soon as possible. See if either side can stop one of the payments. If that's impossible, you can at least request a refund right away with the credit card company and ask your bank to waive the overdraft fee. There's no guarantee, but banks may waive overdraft fees in situations like these.

Does overpaying your credit card impact your credit score?

Overpaying your credit card doesn't impact your credit score. For credit scoring purposes, there's no difference whether the card has a balance of $0 or an overpayment credit.

A potential misconception is that overpaying your credit card can improve your credit utilization. Your credit utilization is the percentage of your available credit that you use, and a lower percentage is better for your credit score.

That's not how it works, though. Credit card companies can't report that a card has a negative balance. Instead, they must report it as a balance of $0. There's no way to boost your credit score by overpaying your credit card bill.

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.

A minor inconvenience that's easily resolved

There are several ways an overpayment on a credit card can happen, but fortunately -- unlike more serious credit card mistakes -- it normally isn't a big deal. You'll end up with a spending credit you can either use or get as a refund.

While you won't have any problems because of an overpaid credit card, keep in mind that there's also no good reason to leave your card that way. It doesn't help your credit score, and there are no advantages for you. If you have any doubt that you'll use the credit balance within a month, you should go ahead and get your money refunded.

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