Is Overpaying Your Credit Card a Bad Idea?

Q: Does overpaying your credit card hurt your credit score?

No. A negative balance is not recorded as part of your credit history and, as a result, does not have any direct impact on your credit scores. Indeed, an overpayment will show up as if you paid your balance in full, which could have a positive impact on your credit.

Q: Is it bad to overpay your credit card?

No. Generally, it isn’t bad to overpay your credit card. When you pay more than the balance due, your credit card company will typically issue the amount you’re owed as a statement credit, which means your balance will be negative until you spend the credit.

Q: Can I keep a negative balance on my credit card?

Yes. A negative balance should eventually go back to zero or positive territory if you continue to use your credit card as usual. However, if you have a negative balance on a card you never or rarely use, it can be a good idea to request a refund.

Q: How long do you have to dispute a credit card charge?

You generally have 60 days to dispute a charge with your credit card company. However, the sooner you dispute an erroneous or potentially fraudulent charge, generally, the better.

What Happens if You Overpay Your Credit Card?

Jason SteeleUpdated October 21, 2022

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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

If you accidentally overpay your credit card, or a refund comes through right after you’ve paid your bill in full, you’ll end up with a negative account balance. This presents an unusual situation: Your credit card company actually owes you money.Is this a bad thing? Is it a good thing? Actually, it’s neither. There are no penalties for having a negative balance. On the other hand, there are no benefits — like a credit score boost or higher credit limit — either. Here’s a closer look at how overpayment can happen, how it affects your credit card account, and what to do about it.

How Can You Overpay Your Credit Card?

There are actually several different ways you can end up overpaying your card, some through no fault of your own. Here are some of the most common scenarios.

Manual Payments

Generally, the way credit cards work is that you have an option for how much you want to pay by the payment due date — the full amount, the minimum balance, or a custom amount. The custom amount option allows you to choose an amount somewhere in-between the minimum and the full balance amount. However, it also introduces the possibility for human error. You might accidentally add an extra digit or key in one wrong number. If you overpay your card, you’ll end up with a negative balance. For example, if you owe $458 and you pay $558, you’ll have a -$100 card balance.

Making Manual Payments After Setting up Automatic Payments

Autopay saves you from having to worry about remembering to make your credit card payments on time. 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. If you make a manual payment on or very close to the payment due date, the credit card company will still likely deduct the full balance as scheduled, leading to an overpayment.

Refunds and Credits

Getting a credit card refund is another common way to end up overpaying your credit card. For example, let’s say you buy a pair of sneakers in July, then pay that month’s credit card balance (which includes the sneaker charge) in full. However, you never wear the sneakers, so in August you decide to return them to the store. If the refund is more than your current credit card balance, you would end up with a negative balance.A similar situation can also occur if you have a rewards credit card. Some rewards cards provide benefits in the form of statement credits. If you earn a credit toward your balance, it could potentially result in an overpayment if the credit is more than your current card balance.

Steps to Take After Overpaying Your Credit Card

If you realize that you’ve overpaid your credit card, there’s no need to panic. The money is still yours. Plus, there are some simple ways to fix the situation.

Leaving the Negative Balance to Roll Over to the Next Month

The simplest solution is to think of your overpayment as a prepayment on future expenses. Just continue using your credit card for new purchases as usual, and the negative balance will be resolved without you having to do anything special. As an upside, you will owe less on the next month’s statement because you started with a credit.

Asking for a Refund

If you would prefer to get the money back, you can ask your credit card issuer to send it to you. Federal regulation requires creditors to reply to a refund request within seven business days of receiving it. You can typically make your request online, by phone, or by letter. Refunds may be issued in the form of cash, check, money order, or direct deposit. You may also want to keep in mind that even if you don’t ask for a refund, your credit card company is required to issue a refund if you don’t make any other purchases or use up the credit for more than six months.

Tips for Avoiding Credit Card Overpayments

While there’s generally no major downside to overpaying your credit card, there’s no real upside either. It ties up your cash, and it can be a hassle to have to request a refund. Here are some tips to help ensure you pay what you need to, when you need to, but not a dollar more.

Setting Up Autopay

One simple way to avoid overpaying is to set up autopay on your credit card. You can typically set autopay to pay the minimum payment, pay a fixed amount, or pay the bill in full by a specific date. This ensures that the correct amount will be deducted from an account of your choice by your payment due date. It avoids overpaying, as well as underpaying or paying late (and facing fees and interest charges).

Going Through Your Card Statement Regularly

Keeping tabs on your account balance and checking your pending transactions can also be helpful, especially if you plan to make an extra payment during the month. Doing this also allows you to spot any mistakes or fraudulent charges as soon as they occur. If you can get them corrected before your balance is due, you can avoid overpayment.

Setting up Account Alerts

It’s free to set up credit card account notifications. You can typically choose to get alerted any time a purchase (or purchase over a certain amount) is charged, a payment/refund is credited to your card, when there’s a bill due, and when a suspicious charge hits your credit card account. This simple step can help you avoid overpayment or paying your bill twice, and also help you pick up credit card fraud or identity theft right away.

Handling a Fraud Alert After Overpaying Your Credit Card

While overpaying a credit card bill by a small amount is generally fine, overpaying by a significant amount (say adding an extra zero) might cause a problem. A large overpayment can be a sign of refund fraud or even money laundering. As a result, it might cause your issuer to freeze your account while they investigate the issue or, potentially, close your account altogether.You can generally resolve a large overpayment issue by calling your issuer and explaining the mistake. If they are concerned about fraud, they may ask you a series of questions to ensure that they are really talking to you and not someone who has stolen your identity. Once you verify your identity as the primary cardholder and explain the error, your card should be reactivated or your account restored. If they are unable to re-open your account, you can simply start shopping for a new credit card. Overpaying your card won’t have negatively impacted your credit, and you might be able to use the mistake as an opportunity to snag a valuable credit card sign-up bonus.Recommended: The Best Credit Cards

The Takeaway

It is possible to overpay your credit card, but it isn’t something that you should try to do. There aren’t any particular benefits to overpayment, and it can tie up your cash and keep you from using it (or earning interest on it) somewhere else. However, if you do accidentally overpay, there's no reason to worry. You have plenty of options. You can choose to spend down the negative credit balance, request a refund, or simply wait for the issuer to refund it to you automatically. To avoid overpaying your credit card, you’ll want to carefully enter the correct numbers when paying, or rely on autopay to make payments for you.If you're interested in exploring new credit card options, Lantern by SoFi can help. With our online marketplace, you can shop different types of cards and compare multiple credit card offers matched to your needs and qualifications all in one place.

Frequently Asked Questions

Does overpaying your credit card hurt your credit score?

Is it bad to overpay your credit card?

Can I keep a negative balance on my credit card?

How long do you have to dispute a credit card charge?

Photo credit: iStock/Dusan Atlagic

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About the Author

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.

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