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Larn how paying more than you owe affects your finances

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Paying a credit card bill is unremarkably a simple process. You log in to your online business relationship, cull whether yous'll pay the minimum, the statement remainder, or another amount, and yous submit the payment. You tin too use automatic payments to make this even more user-friendly for you lot.

There are, yet, situations when consumers terminate upward overpaying credit cards. Since overpayment situations similar these aren't mutual, it's natural to wonder what will happen to the money.

Hither's everything yous need to know near overpaying a credit card bill, from how information technology happens to how you lot can get your money back.

What happens if you overpay your credit menu neb?

If you lot overpay your credit card bill, the excess corporeality volition remain on the card as a spending credit, likewise known as a credit balance, that yous tin utilize. Well-nigh card issuers list the credit amount every bit a negative balance on the bill of fare.

Let'southward say yous have a $500 residue on your credit card. Yous accidentally make two $500 payments. The get-go payment takes your balance to $0, and the second takes it to minus $500.

Although a negative balance on your credit card bill may wait strange, at that place'due south no need to worry. Any charge you lot make will exist deducted from the overpay amount. Standing the example above, if y'all fabricated a $100 purchase with your card, information technology would result in a new residual of minus $400.

If y'all don't apply the card for 6 months, and so the card issuer is legally required to consequence a refund for the overpay.

How does overpaying a credit card happen?

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

Receiving a refund after paying the credit menu pecker
Making duplicate transmission payments
Making both an automated and manual payment
Providing an incorrect payment amount

Receiving a refund

When you receive a refund for a buy you paid with your credit bill of fare, the refunded amount goes back on the carte. That tin 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, and so you lot get a refund on the 20th. That $100 payment would become back on your card and lead to a credit remainder.

Making duplicate manual payments

It's possible to send in indistinguishable manual payments on your credit card. If you're wondering how anyone could make this fault, the reason is the lag time betwixt when yous send a payment and when it processes.

Credit card payments can have a few days to process. During that processing time, your online business relationship may non reflect the payment. If you send in a payment on the 1st and cheque your account again on the 2d, the balance could look the aforementioned.

For those of us who are forgetful at times, it's easy to mistakenly send in a indistinguishable payment this way. I way to avert this is to set up up automatic payments, which are also a skilful manner to ensure y'all don't miss a credit carte du jour payment. Another is to check your most contempo payment confirmation emails earlier making any new transmission payments.

Making both an automatic and a manual payment

Automatic payments typically won't get through if you've already paid your credit carte du jour beak. 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 fourth dimension to stop the automated payment.

Providing an wrong payment amount

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

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

The aforementioned is truthful if y'all pay by cheque and you write the wrong amount.

What can you practice if you overpay your credit card?

Your two all-time options after overpaying a credit card are to apply the credit residual or request a refund.

If it's non a large overpayment, then you may just want to use it past continuing to brand purchases with the card. This is the easiest choice, and information technology works well with credit cards that y'all use often.

If you lot overpaid by quite a bit or you don't utilize the carte du jour much, you should request a refund. Y'all tin can practise and so by calling the number on the back of your credit carte du jour. The card issuer will either upshot a refund to the payment account or send you a check. This shouldn't take longer than seven to ten business organisation days, and it's oftentimes washed much more than quickly.

The one thing you lot shouldn't practise is keep a negative balance on your credit card. There'due south no do good to letting a credit card company hold on to money that could be earning y'all interest in a bank business relationship.

What about overdraft fees?

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

Commencement by contacting both your credit carte du jour company and your bank every bit soon as possible. See if either side tin stop one of the payments. If that's incommunicable, y'all tin at least request a refund right away with the credit carte company and ask your bank to waive the overdraft fee. There'due south no guarantee, but banks may waive overdraft fees in situations like these.

Does overpaying your credit card bear on 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 remainder of $0 or an overpayment credit.

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

That's not how information technology works, though. Credit carte du jour companies tin't report that a card has a negative balance. Instead, they must written report information technology equally a remainder of $0. There's no way to heave your credit score by overpaying your credit carte bill.

If you want to improve your credit score, endeavour opening a new credit card instead. The increased credit limit will lower your overall credit utilization charge per unit and assist your score.

A small-scale inconvenience that's hands resolved

There are several ways an overpayment on a credit carte du jour tin happen, but fortunately -- unlike more serious credit card mistakes -- information technology normally isn't a large deal. You'll stop up with a spending credit y'all can either utilize or get as a refund.

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

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