Maybe you hit the wrong key as you were making your payment. Maybe you’ve been refunded on a returned purchase. Maybe you paid twice in error. Regardless of how it happened, you’ve overpaid your credit card and are now looking at an adverse balance on your statement. Overpayments happen more frequently than you probably realize. Luckily, there are several ways to correct the oversight and obtain your money back. If you’ve got an overpaid credit card, here’s what to do.
What is a Negative Balance?
If you paid a credit card provider more than you owe, your statement will show a negative balance. All this means would be that the provider owes you money, rather than the other way around. More often than not, this doesn’t mean you’ve done anything wrong. Usually, it’s the result of a payment that’s been made in error (perhaps you set up an automatic payment too early after making a manual payment), reimbursement on purchases, or a simple typo. As forbes.com writes, a negative balance won’t usually do you any harm. It won’t affect your credit rating and it’s not likely to put you in the provider’s bad books. None-the-less, it’s not something you should be actively pursuing. Having money tangled up into a credit card won’t help your credit score. It won’t accrue curiosity about the same way as it would on the savings account, and it’s not going to help you build your wealth. It’s also not as easily accessible as money on a regular account, meaning that if you find yourself suddenly looking for the money, you might have to wait to get it.
Why You Should Try to Avoid a Negative Balance
A negative balance is often the result of some form of error or a situation outside of your immediate control. However, if you’re laboring underneath the assumption that deliberately making overpayments does you some kind of good, it’s time to stop. Some of the reasons to steer clear of an overpayment include:
It Might Be Treated As Fraud
As bankrate.com notes, a small overpayment will do little more than result in a negative balance on your account. However, a significant overpayment may behave as a fraud trigger to your card issuer. While most large overpayments would be the result of adding an extra digit to the payment amount in error, they are able to also be seen as a red flag. Significant overpayments are both signs of potential money laundering and refund fraud. If your provider suspects either one, they will freeze your account before proceeding to research. Some may close your account altogether. If this happens, contact your issuer immediately. When the overpayment was the result of a simple oversight or has some other innocent explanation, most issuers will reactivate your account once the situation has been explained.
You Won’t Benefit
Overpaying a credit card bill by a small amount won’t have an adverse effect on your account. But neither will it have a positive effect. Should you overpay in the hope of restoring the harm done by missed or late payments, you’re out of luck. Your credit score isn’t going to take a leap in the right direction because of a negative balance. Neither will it improve your credit utilization score. Worse still, the overpayment will essentially be sat on your credit card doing nothing until you stand. Regardless of how significant the overpayment, it’ll earn zero interest while it’s on your credit card. If you have money to spare, you’d be much better advised to put it in a high-interest savings account where it’ll actually help accrue wealth.
What To Do If You Overpay Your Credit Card
If you make an overpayment in error, you have several methods to resolve the situation. You can:
If the overpayment was small, many people will simply prefer to do nothing and permit the credit to roll over towards any charges they make or towards next month’s charge. Offering you still use the card or have an outstanding balance, this is usually the simplest way of dealing with the situation.
Request a Refund
If your overpayment was for a significant amount or if you don’t intend to use the account again, you are able to request a refund from the provider. Some providers will help you to request the refund on the phone or your online account, while others require the request in writing. Check with your provider directly for those who have any concerns over which request type is accepted. Once they receive your request, the provider is legally obligated to follow along with up within 7 business days. Refunds may either be paid directly into your bank account, or issued as a money order, check, or cash. Your provider should let you know when the refund will be made: should you don’t receive it within the set time frame, contact the company in case a processing error has been created.
Can I Cancel a Credit Card Payment?
While some overpayments come in error, others may be intentional. Should you paid the balance in full as opposed to the minimum amount required, you may now be regretting the decision. But can you request a refund in these instances? As creditcards.com notes, the answer is… it depends. Technically, banks are under no obligation to refund a payment that doesn’t create a negative balance. If your balance is showing a zero rather than a minus, it is at the discretion of the individual provider whether they refund anything paid over the minimum payment. In the first instance, speak to your provider. As a zero balance won’t accrue interest fees, some will be willing to accommodate your request as it also benefits them.
How to prevent Future Overpayments
Some overpayments are unavoidable. Should you receive a refund on a purchase after having already made a payment, or if any fees are canceled by mistake, then your account may end up showing a negative balance without there being anything you can do to avoid it. However, there are certain things you can do to minimize the risk of making an overpayment in error. Number one? Enable autopay on your charge card. This will allow automatic payments to be taken from your account, reducing the risk of anything going wrong during a manual payment. Autopay can be set to pay the minimum payment due, the full balance, or a fixed amount, based on your preference. It will also let you set the date that payment will be taken so you can reduce the risk of a forgotten or overtime.