What Happens If You Overpay on a Credit Card?

Written by charlie gaston
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What Happens If You Overpay on a Credit Card?
Pay more than the minimum payment due on your credit cards. (credit card and hand image by Warren Millar from Fotolia.com)

Credit card companies charge hefty fees for missed payments. To avoid missing a payment, overpay on a credit card so your balance is current and additional funds are available in case of emergency. The money appears as a credit (i.e. as a positive value), so it is available anytime you need it.

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Minimum Monthly Payments

You are contractually required to comply with all the terms and conditions of your credit card account, including guidelines for the repayment of your balance. While you are not required to repay the balance in full at the end of each monthly billing cycle, you are required to make a minimum payment each month. Failure to do so will result in fees.

Misconceptions

You must pay your minimum payment by the due date printed on your billing statement. (Contact your credit card company, if you need to request a new due date.) While your credit card company can charge a non-payment fee if you do not make a payment, it cannot charge you a fee for making a payment prior to your due date or making a payment that exceeds your minimum payment or monthly balance.

Prevention

A consumer heading out of town for a vacation may choose to overpay on a credit card account to avoid non-payment fees. Make your credit card payment online, by mail or by phone. When contacting your credit card company by phone, explain that you are travelling out of town and want to pay more than the balance to cover the expenses you expect to incur while travelling.

Benefits

Extra money paid beyond the credit card balance will appear on your next billing cycle as a credit. As you make purchases, each charge will be deducted from that credit. For example, if you pay £65 over your credit card balance, you will have a credit for one hundred dollars. If you purchase a lamp for £48, you will then have a credit of £16.

Interest

Overpayments made on a credit card balance are not subject to interest. If you close your credit card account after making an overpayment, your credit card company will issue a check to you excluding any fees that may be owed.

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