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Overpaid a Credit Card? Here is What You Should do

Sandra MacGregor

Jul 06, 2022 7 min read

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Overpaid a Credit Card? Here is What You Should do

There’s a lot of talk about the importance of paying your credit card balance on time, but what happens if you have an overpaid credit card and now have a negative balance (also known as a credit balance)?

Not to fear. Negative balances are actually a good thing because it means the credit card issuer owes you money. When you have a credit balance, you can either ask for a credit card refund or think of it as a form of statement credit and just use your card as you would normally. 

If you want to avoid negative balances in the future, you could set up automatic payments, which is when you allow your credit card issuer to withdraw either the minimum payment amount or the full balance each month. That way you never have to make a manual payment or worry about getting a credit balance ever again.

Credit Card Statements

What is Overpaying a Credit Card?

An overpaid credit card is when you paid more than you actually owe on your credit card bill and thus have a credit balance. Negative balances usually show up on a credit card statement as a current balance in the negative (aka a number with a minus in front of it). Sometimes, depending on who your credit card provider is, negative balances might also be shown in brackets on your statement. 

A credit balance isn’t a cause for worry. Negative balances sound scary but there are no negative effects on your credit file. It just means you’ve likely made an extra payment and may be entitled to a credit card refund. The only cause for concern would be if you have a very large credit balance that will make it difficult for you to pay your other monthly expenses. 

The good news is that a negative credit card balance shouldn’t have any significant impact on your credit score. When it comes to credit cards, credit bureaus are concerned with things like missed or late payments, not negative balances. In fact, negative balances can even have the added positive side effect of giving your credit score a temporary boost. 

That’s because an overpayment will impact your credit utilization rate, which is how much of your available credit you’re using at any one time. Credit utilization is one of the factors credit bureaus use to calculate your credit score, and they prefer to see a ratio below 30%. When you have an overpayment, it reduces your ratio, which will in turn give your credit score a bit of a boost. 

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What Causes A Credit Card Overpayment?

There are two main reasons you are likely to have a credit card overpayment: you made a clerical mistake and entered the wrong number when you made a payment, or a refund resulted in an inaccurate amount owing on your statement.

Negative Card Balance

Making Manual Payments

If you pay your credit card bills manually, it’s possible that you simply made a mistake when you went to make a payment online. Manual payments can cause you to overpay your credit card because it’s so easy to make a mistake, such as adding in an extra zero when you type in the amount you want to pay. 

Some credit card users are very cautious about avoiding interest and so may make payments before they receive their official card statement. In that case, it can be very easy to overestimate a card account balance and pay more than what is actually owed.

Receiving Refunds

A credit card refund could also result in an overpayment on your credit card. This happens when you pay your credit card bill but then return an item that was charged to your card. If the credit card return takes place within the time period of the same monthly statement, then there’s no issue because the credit is simply deducted from the balance. However, if the credit appears on your statement after you’ve already paid the balance, then your statement will show a credit balance.

Avoid Overpaying

Credit Card Cash Back Rewards 

Another way to inadvertently overpay a credit card is to have cash-back rewards issued as a statement credit. Cash-back credit cards each have their own way of rewarding the cardholder. Sometimes you may get an automatic monthly cash-back amount credited to your account, or you may simply get a one-time yearly amount issued as a statement credit. If you didn’t charge a large amount to your card for the month, the sudden influx of cash back could actually cause your account to have a negative balance. 

What Can You Do After Overpaying Your Credit Card?

If your credit card has been overpaid, you’ll have two main options to resolve the issue:

Leave the Negative Balance

The easiest way to handle a credit card overpayment is just to leave the negative balance on your account. If you do so, the credited amount will just roll over onto your next statement and will act as a credit. So, for example, if your credit balance was $50 then the same amount would simply be deducted from your next credit card balance such that if you charged $500 worth of items on your card, your next monthly balance would only come to a total of $450.

Negative Account Balance

Request a Refund

Another option if you’ve overpaid is to request a credit card refund. While it’s nice to have a credit balance on a card and certainly the easiest way to handle an overpayment, that may not be an option if your overpayment was such a significant amount that you can’t afford to do without it because it could prevent you from paying other expenses. 

If that’s the case, you can reach out by phone or email to your credit card provider to request a credit card refund by explaining to them that you overpaid your balance and that you want a refund rather than a balance credit. 

It’s important to note that individual credit card companies may each have their own way of dealing with credit balance refunds. They may send you the refund as a cheque or, if your card is with the same financial institution that you do your daily banking with, the issuer may simply deposit credit balance refunds into your savings account. 

How to Avoid Overpayments

If you want to avoid negative balances, there are a variety of things you can do:

Set Up Autopayments

The best way to avoid a negative credit balance is by using your credit card’s autopay feature. Most credit card issuers allow cardholders to set up automatic payments. In fact, many issuers even encourage it because it ensures that clients will at least make their minimum required payment and not default on their debts. 

It’s easy to do. Just go online and look for something called “pre-authorized payments.” You then just pick the bank account you want to make the payments from and then select whether you want to pay the entire outstanding balance each month or just the minimum balance owing. 

If you change your mind, you can cancel an authorized payment at any time. It’s also a good idea to sign up for balance alerts that tell you when your credit card balance is due so you can ensure you have enough money available in whatever bank account you make the payment from.

Credit Card Company Owes

Watch For Pending Payments

If you do prefer to pay your credit card bills manually and early rather than using an autopay feature or waiting for the statement to arrive, it’s important to always check for any pending charges before you complete an online payment. If you see any pending payments (they are usually listed as “pending” on your online statement) wait a day or two until they go through before paying your bill to ensure you have the correct total amount owing.

Stop The Payment From Going Through

If you just made the payment and quickly realize that you’ve overpaid, you can try to immediately reach out to your credit card issuer and see if they can adjust the amount or cancel the payment before it is processed. 

The Bottom Line

Think of a negative balance as a form of statement credit. It’s usually nothing to worry about and will in fact reduce the amount you’ll owe on the following month’s credit card bill. If you overpaid by a significant amount and can’t do without the cash, you can always ask your credit card provider for a credit card refund.

Sandra MacGregor
Sandra MacGregor
Personal Finance Writer
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Sandra MacGregor is a professional writer who specializes in topics such as finance, travel, health, and lifestyle. Her work has been featured in the Toronto Star, the Montreal Gazette, and the New York Times. She is a regular contributor to the Borrowell blog.

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