What Happens if You Overpay Your Credit Card Bill?

Time and again, we’ve discussed the importance of paying your credit card on time and in full – or at the very least, the minimum payment.

But what happens when you overpay your credit card?

Though overpaying a credit card seems like an unlikely scenario, it happens more often than you think due to one of the following three reasons

1. Accidentally overpaying your card bill online or via a physical check. This results in a negative balance on that card.

2. Many cardholders have automatic bill payments set up – this means that on a certain day of each month, the card company is authorized to automatically deduct a certain amount from your bank account towards bill payment.

Now what happens if you manually pay your bill a day or two before the date of the automatic payment?

The automatic payment system may execute the automatic payment as usual, which will again result in overpaying the bill.

3. Finally, you may get a negative balance on your credit card if you receive a refund for a purchase that you’ve already paid for.

Imagine that you bought a washing machine worth $2,000 through your credit card and within a few days of the purchase, you paid your card bill in full.

Now, let’s say you returned it to the seller, who in turn issued a refund.

Since you had already paid the bill, if your other charges are less than $2,000, your refund would result in a negative balance on your card.

What can you do in such a scenario?

If you have a negative balance on your credit card, you are entitled to that money.

You can ask the card issuer to refund it.

Once the company receives that request in writing, it is obligated to send you the refund in the form of cash, check, money order - or it must deposit that amount in your bank account within seven business days.

The other option is to spend it down.

Once you’ve spent that entire amount on new purchases, your card will start functioning like a normal card again – in other words, you’ll start accumulating balances for purchases once more.

If you don’t ask for a refund or use the balance to pay for future purchases, then after a lapse of six months, the card company is required to try and return your money to you.

However, don’t bet on getting your money back!

If for some reason the company is unable to contact you – let’s say you’ve moved and the issuer doesn’t have your new contact details – then you can say goodbye to that amount forever.

Why you should avoid overpaying your credit card

There is no benefit to overpaying your card bill.

It does not enhance your credit score in any way – a negative balance has the same impact on a credit score as a $0 balance.

Secondly, if you think that by overpaying your bill you can temporarily raise your credit limit, you are wrong.

For example, many consumers feel that if they have a credit limit of $1,000, bringing down the balance to -$250 would enable them to make a purchase worth $1,250.

Unfortunately, they are mistaken.

Many issuers have a caveat in place which states that no matter how much the negative balance, the cardholder will not be allowed to make purchases that exceed their credit limit.

Finally, and most importantly - an overpayment of a card bill can signal fraud, and thus it may cause the issuer to temporarily or permanently shut down your account.

There have been cases where criminals have overpaid bills using a phony check, and then asked for a refund before the scam was discovered.

To avoid being deceived in this way, card companies often treat overpayment of a bill as a suspicious activity that needs to be taken care of - or monitored.

$50,000 - $250,000 of unsecured credit at 0% interest

At Fund&Grow, we utilize creative credit card financing in such a way that we can help clients with good credit obtain as much as $250,000 of unsecured credit at 0% for a period of 6, 12, or 18 months.

This amount can be used for any purpose – from financing a small business to providing a down payment on a property - no questions asked.

We will guide you every step of the way.

So, if you need these kinds of funds, call us at (800) 996-0270, and we will help you right away.