What Happens If I Overpay My Credit Card Balance?
Learn how a credit card overpayment impacts your account and the practical ways to utilize or reclaim your funds.
Understanding a Credit Balance Overpayment
A credit card overpayment occurs when a cardholder remits an amount exceeding their current outstanding balance. This situation results in a negative balance on the account, often referred to as a credit balance. Instead of owing money to the credit card issuer, the cardholder has funds on deposit with them.
When reviewing a credit card statement or an online account, an overpayment typically appears as a negative number in the balance field. For instance, if a cardholder had a zero balance and mistakenly paid $100, their account balance would show as -$100. Such a credit balance remains on the account until it is either utilized for future purchases or refunded to the cardholder.
Options for Your Overpaid Funds
Cardholders have choices for managing overpaid funds. One approach is to leave the credit balance on the account. These funds will automatically apply to any new purchases or charges made on the card. For example, if a card has a -$100 credit balance and a new $50 purchase is made, the credit balance would then reduce to -$50.
Alternatively, a cardholder can request a refund. To initiate a refund, contact the credit card issuer’s customer service by phone or online. The issuer will then process the refund, typically sending the funds back to the original payment method, such as a direct deposit to the bank account from which the payment originated, or by mailing a physical check. Refunds typically arrive within 7 to 14 business days.
Important Considerations
An overpaid balance on a credit card account can interact with subsequent charges. Any new transactions posted to the account will draw from the existing credit balance before any new debt accrues. This means future purchases reduce the amount of credit held by the issuer. For instance, a $200 credit balance would cover $200 worth of new spending before the account shows a positive balance again.
In instances of very large overpayments, credit card issuers might place a temporary hold on the funds. This security measure allows the issuer to verify the source of the payment and ensure its legitimacy before releasing the funds or applying them fully. While this is not common for small overpayments, it can occur with significant sums to prevent potential fraud or money laundering activities. Such holds are typically resolved within a few business days once the payment clears.
To help prevent future overpayments, it is always advisable to verify the precise amount owed before submitting a payment. Checking the current statement balance or the real-time balance displayed on the issuer’s online portal provides the most accurate figure. Relying solely on a previous statement or an estimated amount can lead to unintentional overpayments.