Perhaps you pressed the wrong key while making the payment. You may have been reimbursed for a returned purchase. Maybe you paid twice by mistake. Regardless of how it happened, you overpaid your credit card and are now seeing a negative balance on your statement. Overpayments happen more often than you probably imagine. Fortunately, there are several ways to correct the oversight and get your money back. If you have 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 of this means that the provider owes you money, and not the other way around. Most of the time, this does not mean that you have done something wrong. It’s usually the result of a payment that was made in error (maybe you set up an automatic payment too soon after making a manual payment), a purchase refund, or a simple typo. As forbes.com writes, a negative balance generally won’t do you any harm. It won’t affect your credit score and it won’t put you on the supplier’s bad books. However, it is not something you should actively pursue. Having money tied to a credit card will not help your credit score. It won’t accrue interest the way you would in a savings account, and it won’t help you build your wealth. It’s also not as easy to access as money in a regular account, which means that if you suddenly need the money, you may have to wait to get it.
Why you should try to avoid a negative balance
A negative balance is usually the result of some kind of error or a situation beyond your immediate control. However, if you’re working under the assumption that deliberately overpaying is doing you some good, it’s time to stop. Some of the reasons to avoid an overpayment include:
Could be treated as fraud
As bankrate.com points out, a small overpayment will do little more than result in a negative balance on your account. However, a significant overpayment can act as a fraud trigger for your card issuer. While most large overpayments are the result of adding an extra digit to the payment amount in error, they can also be seen as a red flag. Large overpayments are signs of potential money laundering and refund fraud. If your provider suspects any of them, they will freeze your account before proceeding to investigate. Some may close their account entirely. If this happens, contact your issuer immediately. If the overpayment was the result of simple carelessness or has some other innocent explanation, most issuers will reactivate your account once the situation has been explained.
You will not benefit
Overpaying a credit card bill for a small amount will not have an adverse effect on your account. But it is not going to have a positive effect either. If you overpay in hopes of restoring the damage caused by late or late payments, you’re out of luck. Your credit score is not going to jump in the right direction as a result of a negative balance. It also won’t improve your credit utilization score. Worse still, the overpayment will basically settle onto your credit card without doing anything until you spend it. Regardless of the importance of the overpayment, it will not earn interest while it is on your credit card. If you have money to spare, it is best to put it in a high-interest savings account where it will really help you build wealth.
What to do if you overpay your credit card
If you make an overpayment by mistake, you have several ways to resolve the situation. You can:
If the overpayment was small, most people will simply choose to do nothing and allow the credit to roll over to their charges or the next month’s charge. As long as you are still using the card or still have an outstanding balance, this is usually the easiest way to deal with the situation.
Request a refund
If your overpayment was for a significant amount or if you do not intend to use the account again, you can request a refund from the provider. Some providers will allow you to request reimbursement by phone or your account online, while others require the request in writing. Check with your provider directly if you have any concerns about what type of request is accepted. Once they receive your request, the provider is legally obliged to follow up within 7 business days. Refunds can be paid directly to your bank account or issued as …