Credit balances: what happens if you overpay your card bill

You're entitled to a refund, but a big overpayment may raise fraud suspicions


Your rights if you overpay your card bill
Your rights if you overpay your card bill

Uh-oh. In a rush, you overpaid your credit card bill.

Can you get your overpayment back? Yes, say federal regulations, but it may not be automatic and it won't be as easy to undo the mistake as it was to make it. What's more, if it was a big overpayment, you may have triggered a fraud alert and you may have to explain yourself.

Whether you wrote an extra digit on a check or typed it in when paying online, your right to get your money back is protected by Regulation Z, a rule passed by the Federal Reserve Board that requires all lenders to disclose all the terms of their loans. Any time you overpay by $1 or more, you've created a "credit balance," and the regulation requires that the institution do three things:

  1. Credit the amount to the consumer's account.
  2. Refund any part of the remaining credit balance within seven business days from receiving a written request from the consumer.
  3. Make a good-faith effort to refund the amount of the credit to a deposit account of the consumer if the credit remains for more than six months.

Your written request
The rules put the onus on you to make the request, in writing, which then triggers a seven-business-day refund requirement.

If you send the credit balance refund request in writing, your refund can come to you in the form of cash, a check, or money order, or can be deposited into a bank account, according to the Office of the Comptroller of the Currency. These rules don't only apply to credit card overpayments. You're also entitled to a refund if you overpay your personal line of credit or home equity line of credit.

Absent a written request, the banks must make a "good-faith effort" to refund the money after six months, which includes trying to track you down through your last known address or telephone number.

Not all credit card issuers are sticklers for receiving the request in writing. Our spot-check of issuers shows some will send you a check for the amount you've overpaid if you just call and ask for a refund.

Your best starting point is to call your credit card issuer and find out if you'll need to put your request in writing, or if a phone call with suffice. If you need to write, confirm the address you need to send the request to, as it may not be the regular billing address.

Another option: spend it down
If you use your card regularly and the credit balance is small, your easiest option is to leave the credit balance on your account and spend it down. As your charge other purchases, the amount you overpaid will eventually be used up.

Absent a written request, the rules leave the banks a lot of leeway in how they give you your money back, and banks handle it differently.

At Wells Fargo, cardholders "can request a refund or we will automatically issue a refund after 90 days if no activity has taken place on the card," says spokeswoman Natalie Brown.

With some card issuers, such as Chase, you can have your credit balance refunded if it's less than $1, but you'll specifically have to make that request, says spokesman Rob Tacey.

Fraud concerns
Not all credit card overpayments are innocent, and a massive one may trigger closer scrutiny from your financial institution or law enforcement officials.

There's a good reason: refund scams, in which a crook will deliberately overpay a bill with a phony check, and then seek a refund before the check is found to be worthless. In one of the largest recent examples, a Pennsylvania man was charged in 2013 by U.S. postal inspectors with defrauding credit card companies and banks out of more than $1 million. Charles Raymond Stato is accused of opening more than 200 credit cards using fraudulent information, then sending more than $130 million in counterfeit checks as "payment," and repeatedly receiving credit balance refund checks.

Huge refund requests also are occasionally tied to money laundering, according to FinCEN, the U.S. Department of Treasury's Financial Crimes Enforcement Network.

"Overpayment is a red flag, but banks are trained to research and see if it is inadvertent," says John Byrne, executive vice president of the Association of Certified Anti-Money Laundering Specialists.

Overpayment is a red flag, but banks are trained to research and see if it is inadvertent. Consumers shouldn't have a difficult time getting money returned if payment is innocent.

-- John Byrne 
Association of Certified Anti-Money Laundering Specialists

"Consumers shouldn't have a difficult time getting money returned if payment is innocent," Byrne says.

Other behavior, while not illegal, may also run afoul of credit card issuers.

Overpaying won't boost credit line
Some consumers have posted questions on online forums about intentionally overpaying their bill in an attempt to bump up their credit line. They might have a $1,000 credit limit, but want to pay $5,000 and then make $5,000 in charges. You probably won't get very far.

Bank of the West's credit card agreement, for example, states: "If we accept a payment from you in excess of your outstanding balance, your available credit limit will not be increased by the amount of the overpayment nor will we be required to authorize transactions for an amount in excess of your credit limit."

Some card issuers, such as Capital One, state they can reject any payment that creates a credit balance. "Any credit balance we allow will not be available until we confirm that your payment has cleared."

Spokeswoman Amanda Lammers explains, "Capital One provides the disclosure and has this policy to provide us with an additional tool to combat fraud, money laundering and other suspicious activity."

And Regions says "You cannot obtain the credit balance through a cash advance or other use of your card."

Several issuers, including Regions, also make it clear you won't earn any interest on your credit balance.

If you're legitimately owed a credit card refund, and your issuer won't pay up, you can file a complaint through the Consumer Financial Protection Bureau.

See related: Your rights under the Fair Credit Billing Act

Published: September 8, 2015

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Follow Us

Updated: 10-24-2016

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.