What Happens if You Overpay Your Credit Card Bill?

Updated Nov. 21, 2022 - First published on Feb. 26, 2020

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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.

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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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Lyle Daly

Lyle is a writer specializing in credit cards, travel rewards programs, and banking. His work has also appeared on MSN Money, USA Today, and Yahoo! Finance.

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Here's How a $10K Withdrawal From Your Bank Could Cause You Financial Problems

By: Steven Porrello | Updated Sept. 29, 2023 - First published on Sept. 29, 2023

Withdrawing money from your checking or savings account may not seem like a suspicious activity. After all, it's your money. Even if it's a large amount, like $10,000, who's to say withdrawing it would call for an investigation?Turns out, withdrawing $10,000 or more from your checking or savings will prompt your bank to file a report with the Financial Crimes Enforcement Unit (FinCEN). It sounds more serious than it actually is, but if you withdraw $10,000 frequently enough -- or worse: break up $10,000 into smaller withdrawals -- you could find yourself under legal scrutiny. To avoid any problems with FinCEN, here's what you should know.Why banks report withdrawals of $10,000 or moreEver since the Bank Secrecy Act of 1970, banks have been required to report any transaction involving $10,000 or more to the federal government, whether it's a cash deposit or a withdrawal. Often, a bank's software will automatically file a Currency Transaction Report (CTR) electronically for transactions that exceed $10,000, even if you're not aware of it.Though it might seem like a violation of your privacy, the Bank Secrecy Act helps the federal government track and prevent financial crimes, like money laundering. When banks fail to report large cash transactions, criminal and suspicious activities can fly under the radar. For instance, between 2004 and 2007, the bank Wachovia -- now a part of Wells Fargo -- allowed about $400 billion in drug cartel money to flow through its banks largely because it failed to report transactions to the federal government.When a $10,000 withdrawal can become a problemTo be clear, a $10,000 withdrawal isn't a criminal activity per se. In fact, FINCen likely receives so many uninteresting CTRs a day, you won't trigger suspicion through a large withdrawal alone. But there are some activities that will put greater vigilance on your bank account. The most common is called structuring.Structuring involves breaking up a large cash transaction, like a $10,000 withdrawal, into smaller parts specifically to evade the Bank Secrecy Act's reporting requirements. For instance, if you withdraw $12,000 in total from your checking account, but break it into three $4,000 withdrawals, the transaction might be seen as structuring.Of course, you could have good reasons for making a series of withdrawals totaling $10,000 or more. But if you do it frequently enough, your bank could report it as suspicious activity. Once flagged, structuring can embroil you in a legal investigation. At that point, if you're caught intentionally evading a bank's reporting requirements -- even if you're just a private person who doesn't want the government keeping tabs on your life -- you could face criminal or financial charges.How to safely (and legally) withdraw $10,000 or moreThe best way to withdraw $10,000 or more is to simply do it. Don't try to break it into smaller installments, or get smart and Venmo your friend half and have them withdraw it for you. If you don't want your activities tracked, don't do anything suspicious that will make your bank report it to FINCen.Truthfully, unless you are engaging in something illegal, you have nothing to worry about. FINCen knows large withdrawals and deposits happen everyday, and it's not concerned with legal cash flows. It's only when you behave suspiciously that you could find yourself under investigation.If you're concerned, you can always talk to your bank. Otherwise, just keep withdrawing as you normally would, and you won't run into any serious financial problems.

SNAP Benefits Will Increase in 2024. Here's How Much a Family of 4 Will Receive

By: Emma Newbery | Updated Aug. 7, 2023 - First published on Aug. 7, 2023

Are SNAP benefits enough?A monthly payment of $973 for a household of four equates to around $8 per person per day. While SNAP benefits aren't designed to cover everything, it isn't easy to feed a family on around $2.66 per person per meal. Indeed, research from the Urban Institute showed that the maximum benefits often don't cover a family's food costs. "Amid inflation, SNAP benefits did not cover the cost of a meal in 99 percent of counties in 2022," said the report.The new benefit amount -- a monthly increase of $34 for a household of four -- is roughly in line with cost-of-living increases measured by the Bureau of Labor Statistics (BLS). Its latest Consumer Price Index figures show that the cost of all items in June, 2023 was up 3% over the year before. However, inflation does not impact all aspects of life equally.The BLS data also shows that food at home increased by 5.7% year over year. The new SNAP benefits do not match this. Hypothetically, a 5.7% increase in benefits for a family of four would mean a new monthly payment of $992, rather than the planned $973.In addition, this year brought the end of the pandemic-era emergency food benefits throughout the country. According to CBPP calculations, this meant the average person received about $90 a month less in SNAP benefits. Even factoring in the increased SNAP benefit amount, many households have seen a significant drop in their food benefit amount, and the revised 2024 payments will do little to close this gap.How to make your SNAP benefits go furtherIt can take time and energy to provide healthy food for your family on a strict budget. The challenge is that in a busy household, time and energy are also limited resources. Even so, if you can carve out some time to plan your grocery-shopping trip, it can make a big difference.Here are some ways you might stretch your SNAP benefits a little:Use cash back apps and coupons: Look for cash back apps that work in stores that take your EBT card. You'll usually need to download an app and then scan your receipt after you've been to the store. Pay attention to coupons, whether in store or online as these can often carry hefty discounts.Always shop with a list: Planning your food shopping is one of the best ways to reduce costs. Even more so if you use a cash back app or coupons. Check what offers are available on items you normally buy before you go shopping. Mark the items that qualify for rewards or discounts on your list, so you don't miss them when you're shopping.Look for double up programs: There are Double Up Food Bucks or other programs in various states that essentially give you two for one on all produce at participating farmers markets and stores. It's a great way to get more fruit and vegetables for your SNAP dollars.Buy in bulk and batch cook: It isn't always easy to find the extra cash for bulk buying when you're eking out every cent. However, if you can manage it, you may be able to save both money and time. You might, for example, batch cook a stew and freeze portions for future meals.Unfortunately, food insecurity still impacts many American households. If you don't have enough money to feed your family this month, look for additional help. Find out what food pantries and soup kitchens are operating in your area on which days, and whether you'll need to present any documents. Call United Way at 211 for information about assistance programs in your area.

3 Reasons I Don't Like Aldi as Much as I Used To

By: Maurie Backman | Updated Sept. 13, 2023 - First published on Sept. 13, 2023

At some point in 2022, I discovered Aldi and began shopping there weekly. I found that I was able to save money on my grocery bill by purchasing certain produce items there. And since I happen to have an Aldi adjacent to my local Costco, it wasn't particularly out of my way.But over the past few months, I've become less enamored with Aldi. Here's why.1. The selection is just too limitedAldi -- at least near me -- is a minimally stocked grocery store. The shelves aren't loaded the way they are at my nearby ShopRite and Stop & Shop.To be fair, this was the case when I first started shopping there. But because there's just not a lot of selection, I'm generally limited to only buying a few items when I pop into Aldi.Not so long ago, I was running into Aldi for some fruit, which I usually buy there, and I needed to grab shredded cheddar cheese. Normally, I get that at Costco, but I didn't want to run next door to Costco and wait in a line for cheese alone. Unfortunately, though, Aldi didn't have the cheese I needed, so I had to make an extra stop anyway.2. The inventory is too inconsistentNot only is there a limited selection of food items I can buy at Aldi, but sometimes, I can't even find the five or six things I'm looking for. Aldi was once my go-to source for avocados, since it's an expensive purchase and Aldi tends to sell them for less than Costco (at least in my area). But the last few times I stopped at Aldi, avocados weren't in stock.And that's happened to me with other things, too. Over the past several months, I've struggled to find everything from cucumbers to strawberries at Aldi as well.3. What the store saves me on groceries, I lose via lost working hoursShopping at Aldi still has the potential to save me a little money on groceries. At a time when supermarket prices are up 3.6% on an annual basis, that helps.The problem, however, is that even though Aldi is right near Costco in my neighborhood, thereby allowing me to combine those trips, it still takes time to visit an extra supermarket. I have to find parking, wait in a checkout line, and spend time searching the shelves.While it's nice to save $2 here and $3 there, the reality is that a stop at Aldi might cost me 20 or more minutes of work -- especially when I don't manage to find the things I need. And losing out on that work time often means forgoing more than $2 or $3 of income. So from a time perspective, it's just not worth it.Shopping at Aldi could make sense for a lot of people. If you're someone with flexibility in your schedule and grocery list, and you're not so picky about the brands you bring home, then it could pay to spend the time visiting Aldi, even if you don't always manage to find all the things you need. But I've reached the point where shopping at Aldi makes less and less sense for me, so I'll most likely stop going there unless it's a one-off basis.

A Warning to Costco Shoppers Who Are Thinking of Buying Gift Cards

By: Maurie Backman | Updated Sept. 20, 2023 - First published on Sept. 20, 2023

Many people flock to Costco to load up on low-cost groceries and household essentials. But the warehouse club giant sells a lot more than just bulk breakfast cereal and paper towels. You can find everything from apparel to electronics to furniture at Costco. And it could also be a good source for buying gift cards.That said, Costco's gift card offerings may not meet your needs. So it's important to be mindful of these points if you're looking to purchase gift cards at Costco.1. Event gift cards might come with restrictionsCostco sells gift cards to different events. Right now, for example, you can buy gift cards to cover tickets to NASCAR races and NCAA games. And in the summer months, you can often find tickets to Major League Baseball games.But when you buy event gift cards, you're often limited to specific dates. And those may not align well with your schedule. Always read the fine print before buying a Costco gift card that you're going to redeem for event tickets.2. The selection may be limitedThe selection of gift cards you'll find at Costco can be hit or miss, depending on your local store. If there's a specific gift card you're looking for, don't bank on getting it at Costco -- even if you've seen it there before. You may have better luck at your local pharmacy or supermarket.That said, you'll generally find more options for gift cards on Costco.com than in stores. And in many cases, when you buy your gift card online, you'll get it emailed to you so you have access to it right away.3. You may not find the denomination you want One major benefit of buying gift cards at Costco is that you'll often find them priced below face value. For example, you might spend less than $100 for $100 worth of gift cards to a certain restaurant. But one hiccup you might run into is struggling to find a gift card in the exact denomination you want.Let's say you want to give your child's teacher a $35 gift card to IHOP during the holidays. Costco sells a four-pack of $25 IHOP gift cards for $79.99, which is a great deal since that would normally cost you $100. But it also leaves you in a jam if you want to give a $35 gift card and you don't want to go under or over. A $25 gift card may not be enough for that teacher and a friend or partner to share a meal. But $50 (two $25 gift cards) may be more than what you're looking to spend.Buying your gift cards at Costco could result in a lot of savings. But before you gear up to buy gift cards at Costco, be mindful of these potential issues. Also, have a back-up plan if you're buying a gift card to hand over as an immediate gift. That way, you're not left in the lurch.

6 Costco Purchases That Don't Qualify for Cash Back With an Executive Membership

By: Maurie Backman | Updated Sept. 26, 2023 - First published on Sept. 26, 2023

If you're looking to join Costco, you could get away with spending as little as $60 a year on a basic membership. But if you plan to shop there fairly often, it could pay to upgrade to an executive membership.An executive membership at Costco costs $120 a year. But in exchange, you get 2% cash back on Costco purchases, including orders you place online.It takes $3,000 in annual Costco spending to break even on the executive membership -- meaning, to make back the $60 extra you're paying for it. So that's a number you should keep in mind if you're not sure which membership to get.That said, there are certain Costco purchases that do not qualify for cash back with an executive membership. Here are some you should know about.1. Cigarette and tobacco purchasesYou may be able to purchase cigarette and tobacco products at your local Costco. But those items won't be eligible for cash back if you have an executive membership. If you're counting on your weekly cigarette purchase to get you beyond that $3,000 break-even point, you may want to reconsider the upgraded membership.2. GasMembers commonly like to fill up their cars at Costco because the warehouse club giant is known to offer competitive prices on gas. But your fill-up won't result in cash back on your executive membership. That said, the credit card you use might give you cash back, so your personal finances won't totally lose out..3. Costco Shop CardsCostco's Shop Card is the equivalent of a store gift card. The nice thing about Shop Cards is that if you gift one to someone who isn't a Costco member, they'll be allowed in to shop by virtue of having that card, even if they don't have a membership card to flash at the door. But you should also know that buying Costco Shop Cards won't result in earning cash back on your executive membership.4. StampsIt could pay to load up on stamps the next time you visit Costco. But unfortunately, you won't get cash back with your executive membership on that purchase. You might also end up with a really large quantity of stamps if you buy yours at Costco, so you'll need to be careful. Over time, the adhesive on stamps can become less sticky, so if you do most of your bill-paying online, you may be better off buying a smaller quantity of stamps at your local supermarket or post office instead.5. Food court purchasesThere's nothing like a stop at the Costco food court to fill an empty stomach on the cheap. But you should know that your budget meal of frozen yogurt or pizza won't give you cash back toward your executive membership. However, considering that you might spend a mere $1.50 for a hot dog and soda combo, not getting your 2% back means missing out on a whopping $0.03.6. Vehicle purchasesThe maximum cash back you can rack up per year with an executive membership is $1,000. To hit that max, you'd need to spend $50,000 at Costco over the course of 12 months. But that may be doable if you're buying a car through Costco's auto program. However, here's some bad news: Car purchases don't qualify for cash back with an executive membership. So if you're hoping to snag that $1,000, you might really need to buy a lot of cereal and toilet paper.An executive membership at Costco can be very worthwhile despite not earning cash back on the items above. And remember, if you're not sure whether the upgrade is right for you, you may want to just take the chance. Costco will allow you to downgrade your membership after a year if you find that it's not worth it, and you'll also be refunded whatever portion of your upgrade fee you don't make back in cash back form.So if your executive membership only gives you $40 back after a year, you can downgrade to a basic membership and get reimbursed $20. Given that lack of risk, it may be worth giving an executive membership a shot.