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, let’s say federal regulation, but it might not be automatic and it won’t be as easy to fix the mistake as it is to make it. Also, if it was a large overpayment, you may have triggered a fraud alert and you may need to explain yourself.

Whether you wrote an extra number on a check or typed it when paying online, your right to get your money back is protected by Regulation Z , a rule adopted by the Federal Reserve Board that requires all lenders to disclose all the terms of their loans. Every time you overpay $ 1 or more, you create a “credit balance” and the regulations require the institution to do three things:

  1. Credit the amount to the consumer’s account.
  2. Pay off any portion of the credit balance within seven business days of receiving a written request from the consumer.
  3. Make a good faith effort to repay the credit amount to a consumer’s deposit account if the credit lasts longer than six months.

Your written request

The rules require you to make the request in writing, which then triggers a seven business day repayment requirement.

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

In the absence of a written request, banks must make a “good faith effort” to reimburse the money after six months, which includes trying to locate you using your last known address or phone number.

Not all credit card issuers are required to receive the request in writing. Our issuer spot check shows that some will send you a check for the amount you overpaid if you just call to request a refund.

Your best place to start is to call your credit card issuer and find out if you’ll need to make your request in writing or if a phone call is enough. If you need to write, confirm the address you need to send the request to, as it may not be the usual billing address.

Another option: spend it

If you use your card regularly and have a low credit balance, the easiest option is to leave the credit balance in your account and spend it. As you invoice for other purchases, the amount you overpaid will eventually be used.

In the absence of a written request, the rules give banks a lot of leeway in how they return your money to you, and banks handle this differently.

At Wells Fargo, cardholders “can request a refund or we’ll automatically issue a refund after 90 days if no activity has taken place on the card,” said spokesperson Natalie Brown.

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

Fraud issues

Not all credit card overpayments are innocent, and a massive payment can trigger further investigation from your financial institution or law enforcement.

There’s a good reason: Refund scams, in which a scammer will purposely overpay a bill with a bogus check and then demand a refund before the check turns out to be worthless. In one of the most significant recent examples, a man from Pennsylvania was accused in 2013 by U.S. postal inspectors of defrauding credit card companies and banks over $ 1 million. Charles Raymond Stato is accused of opening over 200 credit cards using fraudulent information, then sending over $ 130 million in counterfeit checks as “payment” and repeatedly receiving checks from repayment of credit balance.

Huge refund requests are also sometimes linked to money laundering, according to FinCEN, the Financial Crimes Enforcement Network of the US Treasury Department.

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

“Consumers shouldn’t have a hard time getting reimbursed if the payment is innocent,” Byrne says.

Other behaviors, while not illegal, can also harm credit card issuers.

Paying too much will not increase the line of credit

Some consumers have posted questions in online forums about intentionally overpaying their bill in order to increase their line of credit. They may have a $ 1,000 credit limit, but want to pay $ 5,000 and then incur a $ 5,000 fee. You probably won’t get very far.

The Bank of the West 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. not required to authorize transactions. for an amount greater than your credit limit. “

Some card issuers, such as Capital One, say they can reject any payment that creates a credit balance. “Any credit balance we authorize will not be available until we confirm that your payment has been made. “

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

And Regions says “You can’t get the credit balance through a cash advance or other use of your card.”

Several issuers, including regions, also make it clear that you will not earn any interest on your credit balance.

If a credit card refund is legitimately owed to you and your issuer will not pay, you can file a complaint through the Consumer Financial Protection Bureau .

See linked: Your rights under the Fair Credit Billing Act

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Darcy J. Skinner

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