Should I overpay on my credit card?
There’s no need to overpay on your credit card. But there’s no cause for concern if it happens by mistake, as our guide explains.
Key takeaways
Don't panic if you overpay your credit card by mistake, because you won't lose the money
Small overpayments can be used for future spending
Monitor account balances and scheduled payments to help prevent overpaying. That means paying close attention to your credit card statements
A negative credit card balance won’t harm your credit score
What is a credit card overpayment?
A credit card overpayment is where you pay back more than you owe on your credit card balance.
Not only have you cleared your existing balance, but you’ve gone further and paid too much – effectively now your credit card provider owes you money.
While this is called a ‘negative credit card balance’, it’s generally not something to worry about. Typically, it will be rectified when you use your credit card again.
Should I overpay on my credit card?
No, in a similar way to there being no advantage to overpaying your utility bills and building up credit with your supplier, there’s no advantage to overpaying on your credit card.
You won’t lose the money, but you also won’t earn any interest, and in most cases the funds will just stay in your account until you use your credit card again.
To avoid confusion over the definition of an ‘overpayment’, don’t mistake overpaying with paying more than the minimum required amount.
If you have an outstanding credit card balance that is incurring interest, paying more than the minimum monthly repayment, and ideally clearing the balance in full, is the best approach to pay off your debt more quickly.
How can a negative credit card balance occur?
While overpayment is a direct cause of a negative balance, it's not the only way your account can end up in the green. Here are a few other scenarios:
Receiving a refund: You've made a purchase, paid off your card, and then the item is refunded. Suddenly, you have more credit than you have debt
Additional payments: Perhaps you've set up a direct debit and also made a manual payment, not realising they would overlap
Waived fees or reversed charges: If a fee is removed after you've paid your balance, you'll find yourself with extra credit
Cashback on your account: Earning cashback when you have no outstanding balance can also tip your account into a negative
What should I do if I’ve overpaid my credit card?
If you've overpaid by a small amount, there's no need to fret. You can use the balance towards your next month's spending.
However, if the credit remains untouched for six months, your credit card company is legally required to make an effort to return that money to you.
If you want your funds back sooner, it's best to reach out to your card issuer and request a refund of the overpayment.
How can I avoid an overpayment on my credit card?
To steer clear of overpayment, consider these tips:
Set up a direct debit to cover the full balance and be cautious of making additional payments
Keep a regular check on your account balances and scheduled payments to prevent any overlaps
Will an overpayment impact my credit score?
The short answer is no. A negative credit card balance won’t damage your credit score, but it won’t give your credit score a boost either.
On your credit report, a negative balance simply appears as a zero balance, which doesn't affect your credit utilisation ratio – a key factor in credit scoring.
Do overpayments trigger fraud alerts?
On the other end of the spectrum, significant overpayments can raise red flags for potential fraudulent activity.
Large negative balances may suggest refund fraud or money laundering attempts. In such cases, you might need to pass a fraud test before the issuer can process a refund request to correct your balance.
Personal Finance & Insurance Expert
Our expert says
"With the amount of payments we make every month, it’s easy to make a mistake and that could result in you paying more than you meant to.
"If this happens there’s no need to panic, you’ll be refunded the money unless you use your credit card again for more borrowing. The best practice is to regularly check your credit card balance and set up automatic payments to clear the card."
Other useful guides
We have lots of informative guides about managing credit cards:
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Author
Tim Heming
Personal Finance Expert
Tim Heming is a journalist and editor who has written about personal finance for national newspapers and consumer websites for 15 years. Tim enjoys providing no-nonsense information to help consumers...
Reviewer
Jonathan Leggett
Former Senior Content Editor
With over 15 years of experience in online content and journalism, Jonathan is a former MoneySuperMarket’s editor at large and works across our Broadband, Mobiles, Energy and Money channels. Along...
