Overpaying your credit card balance and carrying a negative balance also won’t hurt your credit score — but it won’t necessarily help it in any special way, either. Overpaying your credit card bill by a small sum will result in a negative balance on your account, but usually nothing more. You could hit the wrong key while paying your credit card balances online or forget to factor in a pending refund, leading to overpaying your credit card bill. If you’re not already enrolled in automatic payments, enabling autopay for your credit card bill can help prevent overpayments due to manual payment errors. The credit card rules state that the issuer must give you a refund in the payment method of your choosing within seven business days of receiving your request. You might also overpay credit card balances if you made a payment to avoid credit card interest charges, but didn’t realize that you already had autopay enabled on your account.
It can be annoying to accidentally overpay a credit card bill, but it won’t affect your credit. It’s easy to accidentally overpay a credit card. However, there’s good news—you can get reimbursed by either making new purchases or requesting a refund from your card issuer.
Autopay is also a preventative measure to avoid late charges and missed payments, but you should still carefully check your balance and purchases to ensure you’re paying exactly what you owe. But it’s also possible to overpay your balance, in which case your issuer owes you money. One of the most important credit card habits is paying your balance on time and in full every month. Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date. Just don’t forget you have it in place or you risk ending up with a negative balance by scheduling an extra payment manually. In this case, your credit card company could freeze your account.
Once you verify your identity as the primary cardholder and explain the error, your card should be reactivated or your account restored. But it is also a potential sign of refund fraud or even money laundering. But you should be aware of the following if you do overpay. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. ✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score.
This is a pretty easy oversight that leaves you with a $50 negative balance on your credit card. Let’s take a look at what overpaying on a credit card means. Most card issuers list the credit amount as a negative balance on the card. 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.
Credit card companies are on the lookout for these and other kinds of fraud when processing a credit balance refund.4 Keep in mind that a significant overpayment may work against you. But if the negative balance is significant, you may need the money back. Your next purchases may be able to cover the negative balance. If you have a small negative balance on your card, it may make sense to just let it roll over to the next month’s statement. In some rare cases though, your issuer may allow you to charge more than your credit limit if you’ve shown responsible card use.
Is taking out a Loan to Pay Off Debt a Good Idea?
While overpaying your credit card may work as a “hack” to increase your short-term purchasing power, it’s inefficient as a frequent or a long-term strategy. To determine if you have overpaid your credit card, check your statement or your current account balance online. Overpaying your credit card isn’t the same as depositing money into an interest-earning savings account.
Overdraft fees
However, If you forget that you have autopay turned on, or you’re simply eager to pay down your balance, you might end up making a manual payment. For example, if you owe $458 and you pay $558, you’ll have a -$100 card balance. On the other hand, there are no benefits — like a credit score boost or higher credit limit — either. It’s important to note that it is up to the issuer’s discretion how they would like to respond when you request a refund. If your card issuer can’t contact you because you’ve moved or changed your phone number, you may not receive that refund. This negative balance will roll over toward any new charges you make or outstanding balances for the next month.
- And is there anything you can do about a negative balance?
- Overpayment is when you pay more than what you owe, thus resulting in a negative credit card balance.
- If you overpay your credit card, the amount is reflected as a negative balance on your account balance.
- This could be good news because you might get money back.
- Having an overpaid credit card balance is better than having a positive balance on your account.
- Funto Omojola is a lead writer and content strategist on the credit cards team.
You can keep track of balances, get reminders of payment due dates and keep on top of how much of your credit card limit you are using with account alerts. 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’ve already paid down your balance and a fraudulent or disputed charge is credited to your account by your credit card company, it could lead to a negative balance. If you’re chipping away at your credit card balance with multiple payments, you might accidentally pay your credit card company more than you mean to.
What to do about your credit balance
It ties up your cash, and it can be a hassle to have to request a refund. Some rewards cards provide benefits in the form of statement credits. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. Other factors, such as our proprietary website rules and whether a product is offered in your area or at your self-selected credit score range, can also impact how and where products appear on this site. But paying your bills in full and on-time will eventually cause your credit history to become positive again.
What happens if your credit card payment bounces?
- Your card issuer might have a policy of returning any overpayment that would create a credit balance.
- This compensation helps us provide tools and services – like free credit score access and monitoring.
- You can request a refund sooner than that by calling and letting your card issuer know you want a refund of your overpayment.
- With so many options, it can be easy to find a card that matches your lifestyle.
- You can generally resolve an overpayment issue by calling your issuer and explaining the mistake.
- If you have a negative balance, Capital One will automatically issue a negative balance refund after two billing cycles.
The returned payment itself isn’t reported to credit bureaus. A returned payment does not count as a payment toward your balance. Or when you miscalculate your available balance and your manually submitted payment gets rejected? You may have scheduled the automatic payment a few days too early, or in some cases, a deposit didn’t clear your checking account in time.
For example, a $500 overpayment might look different if your card limit is $600 versus $5,000. You can try to request a refund from your credit card company. So, now that you realize that you have a negative balance on your next credit card statement, what should you do? Auto payments are a great way to make sure you stay on top of your finances, save you money from late payment fees, and can help boost your credit score. This can cause your credit card statement to have a negative balance.
Many of our cards offer rewards that can be redeemed for cash back or travel-related perks.
Taking the previous what happens if you overpay your credit card example, if you owe $100 on your account, but accidentally pay $200, your account will reflect a balance of -$100. Kenley Young directs daily credit cards coverage for NerdWallet. Funto Omojola is a lead writer and content strategist on the credit cards team.
You can generally resolve an overpayment issue by calling your issuer and explaining the mistake. Overpaying by a large amount may cause your issuer to freeze your account while investigating the issue or even close your account altogether, which could impact your credit score. Find out what to look out for if you accidentally overpay your credit card bill and what you can do about it. Credit card companies report negative balances as a “zero balance” when forwarding your card activity to the credit bureaus.
If you’re interested in exploring new credit card options, Lantern by SoFi can help. It avoids overpaying, as well as underpaying or paying late (and facing fees and interest charges). This ensures that the correct amount will be deducted from an account of your choice by your payment due date. Federal regulation requires creditors to reply to a refund request within seven business days of receiving it. A similar situation can also occur if you have a rewards credit card.
If both those payments go through, then your account will have a negative balance. If you have a negative credit card balance on your account because you paid more than you owed, it’s what’s known as an overpaid credit card. Understanding how credit card overpayment happens can help you know how to respond when it happens and avoid it in the future. You don’t earn interest on a negative credit balance—the money simply sits there until it is refunded or until purchases bring the account back to a positive balance. There tends to be a bit of confusion related to negative credit card balances that may cause people to purposefully overpay in hopes of receiving a benefit.
In fact, a negative balance could actually help you improve your credit scores. If you pay off your balance before getting a refund or if the refund is more than your current balance, that refund will result in a negative balance. You might not have a negative credit card balance very often. But how does a negative credit card balance happen? It just means that instead of owing money to your credit card company, your credit card company actually owes you. By catching up on your payment, communicating with your issuer and addressing any underlying financial strain, you can prevent a one-time mistake from spiraling into credit damage or long-term debt trouble.
A negative balance doesn’t further lower your credit utilization nor does it improve your credit score. The biggest effect that your credit card balance has on your credit score is in terms of your credit utilization—the percentage of your available revolving credit currently in use. You don’t necessarily need that money immediately, so you simply let your account have a negative balance. Neither payment clears in time to stop the other, so you end up with a negative balance equal to the extra payment. But it can be helpful to understand why overpayments happen, what to do about them and how to avoid them in the future.