During times of financial uncertainty, it’s natural to want to maintain control of as much of your money as possible. But mistakes happen; you could hit the wrong key while paying your credit card balances online or mistakenly make a check out for an incorrect sum.
Even after enabling automatic payments, you could end up overpaying. For instance, if you decide to pay off your balance manually before your scheduled automatic payment or your payment posts before you receive a refund from a merchant.
Overpayment happens, but there’s no need to panic about it. Paying more than what’s due on your credit card bills won’t negatively affect your account, and you won’t lose the money. Here are a few things that may happen if you overpay and what you can do to get your money returned.
Your overpayment may be considered fraud
Overpaying your credit card bill by a small sum will often result in a negative balance on your account. 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. But it is also a potential sign of refund fraud or even money laundering. Overpaying by a large amount may cause your issuer to freeze your account while investigating the issue or even closing your account altogether.
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.
If you’ve overpaid your bill by a small amount, you shouldn’t see any negative effects on your account, but you shouldn’t expect a credit boost, either.
Overpaying your bill won’t make up for any past missed or late payments, and it won’t increase your credit score or your credit limit. When you overpay, any amount over the balance due will show up as a negative balance on your account. Negative balances are simply reported as zero balances on your credit report and will not affect your credit utilization.
You also won’t earn interest on your negative balance. Interest applies only to balances you owe. If you are carrying a negative balance, it will not grow if you leave it on your account; it will only decrease as you spend it.
And while overpaying may lead to a credit on your account, this credit doesn’t signify a permanent change in your credit limit. Once you spend the negative balance, your available credit will return to its standard limit.
Steps you can take after overpaying your credit card
Overpaying on your credit account isn’t a good thing or a bad thing, and the simplest solution is to simply spend normally and allow the credit to roll over towards next month’s charges. Here are each of the steps you may consider.
Leave the negative balance to roll over next month
Generally, your overpayment will appear as a credit in the form of a negative balance on your account.
This negative balance will roll over towards any new charges you make or outstanding balances for the next month. If you don’t use the negative balance within six months, your creditor has a legal obligation to try to issue a refund. But if your card issuer can’t contact you because you’ve moved or changed your phone number, you may not receive that refund.
But if you continue making purchases with your card like normal, your overpayment should be resolved without any further action.
Request a refund
If you would prefer to have your money returned by your issuer, you can make a written request for a refund. Some issuers also allow refund requests by phone or through your online account.
Federal regulation requires creditors to follow up within seven business days of receiving the request. Your refund may come in the form of cash, check, money order or direct deposit to a registered bank account. Take note of when you should expect your refund and follow up with your issuer if you don’t receive it by that date to ensure the refund was processed correctly.
Set up autopay
One way to avoid overpaying in the future is by enabling autopay on your credit card bill. This feature will set up an automatic payment from an account of your choice to pay your bill.
You can set the autopay to pay the minimum payment, pay the bill in full or pay a fixed amount, You may also determine the date you’d like the payment to process each month. Log into your online account or mobile app to see your card’s specific autopay options.
Also, remember to check your account balance and payment schedule regularly. Staying aware of your account activity can help you avoid overpaying if you plan to make an extra payment during a billing cycle and reduce the risk of late or missed payments.