Can You Overpay a Credit Card?
5 Min Read | Last updated: October 31, 2024
An overpaid credit card can result in a negative balance and shrink what you owe on your next statement, but it won’t boost your credit score or credit limit.
At-A-Glance
- Errors, refunds, and returns can cause an overpayment on a credit card’s monthly statement.
- Overpayment on your credit card does not improve your credit rating or increase your card’s limit.
- If you make an overpayment, the card company may apply the negative balance toward your next statement, but you can also request a refund.
If you try to pay your credit card balance each month, you know that you have to diligently check your account to see how much you owe. But what happens if you make a mistake and pay more than you needed to?
What Happens if You Overpay a Credit Card?
If you overpay a credit card, you’ll end up with a negative balance, the amount of which reflects how much you overpaid. It may sound like a good thing to prepay credit card debt, especially if you are trying to build your credit score, but in reality, a negative balance may not really benefit the card member.
What Causes a Negative Balance on a Credit Card?
A negative balance on your credit card account essentially means that the credit card company owes you money. It can happen for a variety of reasons, such as:1
- If a card member makes a mistake when paying the bill. For example, paying $250 on a $205 balance.
- If a merchant issues a refund that is larger than your total statement balance, such as for big-ticket purchases like appliances and airline tickets.
- If the credit card company reverses a fraudulent charge that was greater than the total statement balance.
- If a cash back statement credit is applied after the user has already paid their balance in full.
What Does Overpaying Do to Your Credit Score?
What’s important about negative credit card balances is asking not what they may do, but what they don’t do:
- Overpaying does not increase your credit score. Your credit score is influenced strongly by your credit utilization ratio — how much of your credit limit you use regularly. However, anything lower than a $0 balance still merely counts as $0 when calculating your credit utilization ratio, so a negative balance is not counted as positive credit.1
- You will not earn interest on a credit card overpayment. While you may have to pay interest or other finance charges on unpaid credit card balances, you won’t earn interest on a negative balance. An overpayment is merely counted as a credit to your account and will be used to reduce any future balances.2 If you’re trying to improve your financial picture, you may be better off putting that money into savings.
- Overpaying does not raise your credit limit. An overpayment will not help boost your credit limit, not even temporarily. Your credit limit remains the same — you’ll just have a negative balance that will be applied toward your next statement.1 Details like credit score and income are usually factored into a credit limit increase.3
What Should You Do if You Overpay a Credit Card?
Your two options are to let the balance stand or request a refund.
If you have a small negative balance on your card, it may make sense to just let it roll over to the next month’s statement. Your next purchases may be able to cover the negative balance.
But if the negative balance is significant, you may need the money back. In this case, you can request a refund from your credit card issuer through check or direct deposit. After you submit the request, the company is required to refund the overpayment amount within seven days. If you do nothing about the negative balance and do not use your card, the card company should send you a refund withing six months, by law.2
Keep in mind that a significant overpayment may work against you. Money launderers sometimes use excess credit card payments to move money and make it appear legitimate. Credit card companies are on the lookout for these and other kinds of fraud when processing a credit balance refund.4
If you have any questions about how an overpayment affects your account, reach out to your card issuer to learn more about your options, pay your card or ask questions.
What Should You Do if You Overpay Your American Express Credit Card?
If you have overpaid your American Express credit card, sign in to your account online, and open a payment dispute. You will able to notify us that need to correct a credit balance. For more information, click here.
How to Avoid Overpaying Your Cards
Paying credit card bills online, whether on the company’s website or mobile app, can help prevent overpayment on your card, since the balance shown online may include any last-minute refunds or credits, which may make it more up-to-date than the balance on your monthly paper statement. The payment window online usually shows you your “statement balance,” so you don’t risk going over if you wish to pay in full.
If you have enough cash flow to pay your bill in full, or if you budget a set amount monthly to pay off credit cards, setting up automatic payments may prevent minor errors that can turn into negative credit balances. Autopay is also a preventative measure to avoid late charges and missed payments, but you should still carefully check your balance and purchases to ensure you’re paying exactly what you owe. You can always adjust the payment before the due date to any amount between the minimum and the balance due.
In conjunction with these tips, setting up email and text alerts can also help remind you about when the bill is due and the amount you owe. Giving yourself the best tools to stay on top of your account may help you catch payment errors more quickly.4
The Takeaway
Overpaying your credit card won’t add to your credit score or your credit limit. Automating your payments may help avoid overpayments, but the best advice is to read your credit card statement carefully and double-check your amounts before you click “submit” or slip that envelope in the mail.
1 “Can You Have a Negative Balance on a Credit Card?,” Experian
2 “https://www.ecfr.gov/current/title-12/chapter-X/part-1026/subpart-B/section-1026.11,” The Office of the Federal Register (OFR) of the National Archives and Records Administration
3 “Why did I get a low credit limit on a credit card?,” Consumer Financial Protection Bureau
4 “What Happens if You Overpay Your Credit Card?,” Experian
Mercedes Cardona is a New York-based editorial consultant. She’s a former editor at Crain Communications, The Associated Press, and The Economist Group.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
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