What happens if you overpay your credit card? (2024)

FAQs

What happens if you overpay your credit card? ›

Overpaying your credit card bill by a small sum will result in a negative balance on your account, but usually nothing more. However, overpaying by a significant amount may be a fraud trigger for your issuer. Sometimes overpayment of large sums can be the result of mistakenly adding an extra zero to your payment.

Whether you've made too large a payment or had a refund come through for a recent return, an overpayment results in a negative balance on your credit card. Suddenly, your credit card issuer owes you money instead of the other way around.

There's no penalty for overpaying your credit card. If the negative balance isn't significant and you use the card regularly, you can just spend the statement credit on purchases. Once you've spent it, you'll be using your regular credit line again. Request a refund.

You won't be penalized for overpaying your credit card, but there are also no benefits for doing so. When you pay more than the balance due, your issuer should automatically issue the amount you're owed as a statement credit and your credit line will reflect a negative balance until you've spent the credit.

The maximum amount that can be paid is for the posted balance in full. Pending transactions aren't included because the merchant hasn't collected their funds from the authorization yet. And overpayments aren't guaranteed to create excess available credit.

You can generally resolve an overpayment issue by calling your issuer and explaining the mistake. Once you verify your identity as the primary cardholder and explain the error, your card should be reactivated or your account restored.

Pros of paying your credit card off in full

You'll avoid paying interest if you pay your credit card balance off in full each month by the due date. Establish a better credit score: Using your credit card and repaying your balance will help you establish a good payment history.

Beyond your credit score, making multiple payments can also help you put a bigger dent in your credit card debt, particularly if you carry a balance from month to month. “Making multiple payments is a smart way to reduce your interest costs,” said Jason Steele, credit card expert and CNET expert review board member.

Among those terms is that if you go over the limit on your card, the card issuer can charge you an over-limit fee. This means paying a fee in addition to the amount required to get the card balance back under the limit.

You can handle an overpaid credit card statement easily. The simplest method 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.

What happens if I have a positive balance on my credit card? ›

A positive balance on your credit card, also called a credit balance, is an overpayment or refund on your card. It's an amount that belongs to you, so it's the opposite of an amount you owe. Your next purchases will simply be deducted from the positive balance until your balance drops to $0.

Yes, you can go over your credit limit, but there's no surefire way to know how much you can spend in excess of your limit. Card issuers may consider a variety of factors, such as your past payment history, when deciding the risk of approving an over-the-limit transaction.

By making a larger monthly payment, more money goes toward the principal balance, which is what your interest is calculated on. Every dollar paid over the minimum reduces your original debt and the interest charged on that debt.

By making a larger monthly payment, more money goes toward the principal balance, which is what your interest is calculated on. Every dollar paid over the minimum reduces your original debt and the interest charged on that debt.

It is possible to use a credit card to transfer money into a bank account by using a cash advance or balance transfer check, but we can't recommend it. Cash advances are risky because of the high interest rates and costly one-time fees. Balance transfers can lead to more debt if they're not handled correctly.

A positive balance on your credit card, also called a credit balance, is an overpayment or refund on your card. It's an amount that belongs to you, so it's the opposite of an amount you owe. Your next purchases will simply be deducted from the positive balance until your balance drops to $0.

Getting a refund from a merchant is another way you might end up with a negative balance. If you pay off your balance before getting a refund or if the refund is more than your current balance, that refund would result in a negative balance.