If you unintentionally overpay your credit card bill, you may see a negative balance on your account. Although overpaying a credit card isn’t ideal — that cash flow could’ve been used toward another expense, after all — it’s usually not cause for concern. A negative balance is not recorded as part of your payment or credit history and therefore does not have an impact on your score directly. It’s important to note that a credit balance on your credit card account is not a cancellation of your future payment obligations.
Don’t worry if you have a negative balance
This option will prevent the IRS from taking legal action (like a levy) while you make payments, but penalties and interest will continue to accrue. Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing. Doug Milnes is a CFA charter holder with over 10 years of experience in corporate finance and the Head of Credit Cards at MoneyGeek. Formerly, he performed valuations for Duff and Phelps and financial planning and analysis for various companies.
- Erin is a personal finance expert and journalist who has been writing online for nearly a decade.
- An overpayment is when you, the cardholder, have overpaid on your balance and therefore have a negative balance.
- You might be tempted to send in your tax return but not pay the money you owe.
- However, paying down a previously high balance may give your credit score a boost.
- You may also determine the date you’d like the payment to process each month.
Does a Negative Balance Hurt Your Credit Score?
Here’s what happens if you can’t pay your taxes and what options you have to avoid major financial consequences. Regularly check your credit score and report to ensure all the information is accurate and to see how the balance transfer impacts your credit over time. Once you’ve transferred a balance from one credit card to another, there are several steps you should take to ensure you’re managing your debt effectively. NerdWallet’s picks for the best cash-back credit cards in Canada include top contenders across numerous categories. Your balance will go from negative to zero and then eventually start to rise, probably within the next billing cycle, as you make new purchases. Overpaying your credit card can happen for a number of different reasons.
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When you pay more than is due on an account, your credit line will reflect a negative balance. Taking the previous example, if you owe $100 on your account, but accidentally pay $200, your account will reflect a balance of -$100. In this scenario, a statement credit is automatically added to your account — as required by federal law — that will count toward any new purchases you make.
It is in the issuer’s interest to let you carry a balance so that it can collect interest charges, so you might find that issuers are willing to accommodate such a request. When you pay a credit card bill online, you have the option to enter a custom payment amount. If you go that route and enter more than your card’s balance, either by mistake or because you don’t completely understand your credit card statement, then you’ll overpay your bill.
Then, your card issuer will have seven days to send you a refund after receiving your request. An overpayment on your credit card will be applied as a credit to your account and may appear as a negative balance in your online account or on your billing statement. For example, if your current balance (including interest and pending charges) is $100 and you make a $150 payment, you would have a -$50 balance. If you’re not already enrolled in automatic payments, enabling autopay for your credit card bill can help prevent overpayments due to manual payment errors. Leveraging your card’s autopay feature is a responsible way to use a credit card since it ensures you pay the correct amount on your account on time. The credit card rules state that the issuer must give you a refund in the payment method of your choosing within seven business days of receiving your request.
The law dictates that you must notify your credit card issuer of the problem within 60 days, and they must resolve it within 90 days of being notified. Overall, if you overpay your credit card by accident, what happens when you overpay your credit card don’t worry about it too much. And if you accidentally trigger a fraud investigation by overpaying with an extra digit, for example, just give the card issuer a call and explain the mistake.
To avoid overpaying, you should check your account balance and payment schedule regularly, as well as sign up for alerts so that you’re notified when the due date is approaching. This will also allow you to double-check any pending transactions before you due date. If you plan to make an extra payment during a billing cycle, staying aware of your account activity can help you avoid overpaying and reduce the risk of late or missed payments. If you have overpaid your American Express credit card, sign in to your account online, and open a payment dispute. If you notice an overpayment, it can be a good idea to contact your credit card issuer, particularly if the overpayment was significant.
It can be annoying to accidentally overpay a credit card bill, but it won’t affect your credit. And the credit card issuer is required to return the overpayment, so you won’t be out the money, either. This can be accomplished either with a check or deposit to your bank account, or through using the overpayment to cover new charges. Whether you’ve made too large a payment or had a refund come through for a recent return, an overpayment results in a negative balance on your credit card. Suddenly, your credit card issuer owes you money instead of the other way around.
With a credit card like the Capital One Venture X Rewards Credit Card, all you need to do is check the issuer’s app. Capital One shows your scheduled payments on top of the recent transactions section and often updates your available credit almost immediately after you make a payment. Fortunately, you typically can clear this up by getting in touch with the issuer. Many experts recommend maintaining a credit utilization ratio of around 10% as this shows credit card companies that you are responsible with your credit.
You could hit the wrong key while paying your credit card balances online or forget to factor in a pending refund, leading to overpaying your credit card bill. You might also decide to pay off your balance manually before your scheduled automatic payment and overpay that way. Overpaying your credit card creates a temporary credit balance, which can be used to offset future purchases or finance charges. However, it’s essential to be aware of the expiration date set by the credit card issuer to ensure that you maximize the use of the credit balance. A negative balance on a credit card means your balance is below zero, and your credit card company owes you money rather than the other way around. Your credit card balance could be negative if you make a payment that’s a lot larger than the balance due or if you receive a credit to your account.