If you overpay your credit card, here is what typically happens:
- Your credit card account will show a negative balance, meaning the credit card issuer owes you money. For example, if you pay $200 when you only owe $100, your balance will show -$100.
- There are no penalties or negative effects on your credit score due to overpaying. In fact, your credit utilization ratio will temporarily decrease, which can have a positive effect on your credit score, but overpaying itself doesn’t boost your score or credit limit.
- The overpayment essentially acts as a credit on your account that can be applied to future purchases. If you continue using your card, the negative balance will be used up before you owe additional money.
- You have the option to request a refund for the overpaid amount. Credit card issuers are required by law to refund you the amount within seven business days of the request. The refund process may vary by issuer, including requests made online or by phone.
- If you do nothing, federal regulations require the issuer to make a "good faith" effort to refund your overpayment after six months if the credit remains unused.
- Overpayment by a large amount could sometimes trigger fraud alerts or account reviews by the issuer, but small overpayments usually cause no issues.
In summary, overpaying your credit card leads to a negative balance that you can either leave to apply toward future charges or request a refund for. It doesn’t harm your credit and is generally a simple fix.
