What happens when the bank owes you money?

You might be hurting your credit score if you are overpaying your credit card. Yeah, I know it sounds crazy too. Lowering your credit utilization to 0% or less can have a negative impact on your credit score, because you’re not using credit.. That’s why we’ll go over what happens when you overpay your credit card.

Overpaying your credit card balance results in a negative account balance. The bank will not pay you interest on this money and they won’t charge you any finance fees. You can consider the negative balance like a credit. Any future purchases will be deducted from the negative balance. Let’s learn more!

Maybe, just maybe there might be a few reasons why you would want to overpay your credit card. You might think it’s a good thing to not have a credit card balance and you might be partially right. You still need at least 1% total debt, but it doesn’t have to be on every credit card you own.

Everything You Need To Know About Credit Card Payments

Can I overpay my credit card?

Yes and no, it really depends on the bank. Not all banks will allow you to overpay and the amount may vary between banks. Basically, they want to see you spending money because they make more money off finance charges. Bank don’t make money when you spend responsibly.

Is overpaying your credit card bad?

Yes and no, it depends on how much credit you are using. The only way overpaying your credit card is bad is if you end up have a total credit utilization of 0% on your credit report. That will hurt you credit score and it may take months to recover.

What happens if I pay more than the minimum on my credit card?

When you overpay your credit card balance, you’ll end up with a negative balance on your account. That’s not necessarily a bad thing, just keep in mind your overall credit utilization needs to be at least 1%. You will not pay any fees and will not gain any interest on that negative balance. Any purchase made will be deducted from the balance and you will not have a minimum payment due.

If you end up having a negative balance for 6 months, the bank will have to mail you a check. I’ve actually had a negative balance on a credit card after having a flight refunded many months after the purchase. This was on 1 of 4 American Express credit cards I had open.

Just to catch you up, I’ve had too many credit cards which is actually a good thing. Basically I sign up for a credit card to get the bonus, then completely stop using it. Since I was doing this with American Express, I had a big negative balance on a credit card I stopped using. If you find yourself in this scenario, you can always ask the bank to move the negative balance to an account you are actively using. This makes it easier to manage your money and you won’t have to deal with a check in the future.

How can I use a negative outstanding balance?

You can use your negative available credit card balance by spending on your credit card. The charges you make will be deducted from the negative balance. You can also choose to have that money refunded to you as a check or you can transfer the negative balance as a credit to another credit card account with the same bank.

Can I quickly raise my credit score by overpaying my credit card?

Your credit score is based on you USING credit and the associated history that you build up. The only hack to quickly raise your credit score is to buy a tradeline. Sly Credit can help boost your credit score through the use of tradelines.

What happens to my credit score when I have a negative balance?

A negative balance for a credit card will appears as a $0 statement balance on your credit report. Even if you have a large negative balance, it won’t change your overall credit utilization.

Why you might want to overpay your credit card?

Big Purchase: Let’s say you have a big purchase coming up and need that extra available credit. Instead of trying to overpay your credit card, you can call the bank and ask them to temporarily raise your limit. Just be sure to pay the balance before your credit card statement becomes available.

Bad at budgeting: Maybe you’re bad at budgeting and just want to prepay because you know you’ll spend that money. That’s pretty much how a debit card works, so I guess use a debit card. The dangers of overspending on a credit card are how banks make money. You should learn how to budget your money because that will become an incredibly valuable skill for the rest of your life.

What happens if my money is refunded to a credit card?

The money refunded to your account will appear as a credit. If the amount credited is greater than the statement balance, you’ll have a negative balance. Since the bank owe you money, you have three options:

  • Keep the negative balance and keep using your credit card until you use up that money
  • Request a check for the overpaid funds
  • Have the negative balance transferred to another account
How much can you overpay a credit card?

Not all banks will allow you to overpay your credit card. If a bank does allow you to overpay, it will vary between banks. I HIGHLY suggest to not overpay your card. If you need a credit line for a purchase, you can always call the bank to temporarily increase your credit line. Just be sure to pay a LARGE portion of that balance before your credit card statement date. Otherwise, your credit utilization will be over 100% on that card causing your credit score to plummet.

Can you undo a credit card payment?

You typically have a day to cancel a credit card payment. If you scheduled the credit card in advance, you can cancel it up to a day before the due date. These time frames VARY between banks. If you are having issues paying your credit card, you can work with the bank on a solution to keep your credit score from dropping..

Will a minimum payment hurt your credit?

A minimum payment isn’t a factor on your credit score. Your credit score will not go down if you only pay the minimum. Banks want you to pay so that helps your payment history. You really need to look at credit utilization which means, don’t use any credit card for more than 30% of its available credit limit. Making the minimum payment should be automatic on all your accounts because missing one payment can cause your credit score to drop. Check out the credit tips you should know for more info.

Can I overpay my credit card to increase limit?

Overpaying your credit card is a way to put extra money on your credit card. If you need to overpay your credit card to increase your limit, that will work if your bank allows you to overpay. Instead, I recommend calling your bank and asking for a TEMPORARY increase to make a purchase. They will typically say yes and give you an instant credit line for the purchase.

Do not ask for a credit increase. Ask for a “TEMPORARY increase to make a purchase.” If you ask for a general credit increase, they will have to make an inquiry on your credit report and the decision can take a week. There’s no guarantee your credit line will increase. If they do agree to an increase, they can only upgrade your existing credit line up to 100%. That means, if you have a $1,000 credit line, the most they can give you is a $2,000 credit line. Here’s how to increase your credit limit.

What happens if I pay my credit card bill twice?

Paying your credit card twice isn’t something to worry about. If you notice it early enough, you can cancel one of the duplicate payments. Most banks will show you that you already have a payment pending so you don’t actually pay twice. If double payment does go through, that just means you paid twice and might have a negative balance. You have three options:

  • Keep the negative balance and keep using your credit card until you use up that money
  • Request a check for the overpaid funds
  • Have the negative balance transferred to another account
How many times can I pay my credit card a month?

You can pay your credit card at most once per day, weekly or at least once per month (obviously, right? You have a payment due). I only see this useful if you have a low credit limit and are trying to stay under your credit utilization. Just be sure to have a low statement balance between 1% to 10%. Completely paying off your credit card will show up on your credit report as no activity, which will cause your score to drop. To avoid multiple payments every month, you should learn how to raise your credit limit.

Should I pay my credit card off after every purchase?

ONLY pay your credit card off after every purchase that exceeds 10% of your credit card utilization. When your credit card statement balance hits, you need to have a balance between 1% to 10% because this gets reported to the credit bureaus: Experian, Equifax, and Transunion. If you completely pay off your credit card and have a $0 statement, it will look like you’re not using your credit. Banks want someone who uses their credit cards because that’s how they make money. Credit reporting agencies will drop your score because you’re not using credit.


You can pay your credit cards as much as you like. If you need a temporary credit increase you can call the bank to request one. Overpaying your credit card bill will result in a negative balance which isn’t a bad thing. That’s your money that you can use as you like. Make sure to have a credit utilization between 1% to 10% for the best results on your credit score. Helpful, right? You’re welcome.