Anything wrong with over paying your credit card?

I've never waited for my credit card bill to arrive to pay. I just estimate how much I spend and pay a bit more within a week of the expenditure to avoid getting hit with the interests.

I did a quick search and it seems like there's nothing wrong with over paying a little bit but then I thought what if you take it to the extreme? such as transferring to large amount onto your credit card to buy something a lot more than your credit limit?

Are there any consequences in doing that? such as "you'll only earn points if you use the bank's money"?

Comments

  • +2 votes

    You can bring your credit card in credit to spend over your limit. I.e. you have $1000 credit or a $3000 limit cc, you can spend on a item worth $4000

  • +1 vote

    My CC has a 12k limit, regularly pay 20-40k bills for my business, pay the $$ in advance no issues.

    A few people have said you don't earn points if you CC is in credit though. So must be card specific

  • +1 vote

    I've had no issue with doing this. When travelling OS, I've paid the card's full balance plus several $K or so more. If the card's payment date fell due before returning, and I was somewhere making the payment difficult, it was all good. Have done this a number of times, no issues at all. Still accumulated points as per usual.

  •  

    When I need to over pay, 28 Degrees is the one card I get annoyed with as amount is limited to the amount owed and it's only clear after few business days.

    •  

      I think they've changed this as I've recently (last week) been able to overpay via the bpay section!

      •  

        Thank you for letting me know - I did tried and indeed I can pay now with more than what I owed. I did the From My Bank Accoutn options. They says there for Bpay there is fees apply - what kind of fees is this?

        •  

          Sorry wrong use of words, not bpay but through their payment option, the one without a fee. I was able to overpay

      •  

        With 28 Degrees you can always overpay with bpay, although they charge you a flat rate of 95c each time you use bpay

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          I see, why not just use the other option? with from my bank account doesn't have fees at all and I guess it's the same thing?

  • +1 vote

    You can take it a step further if you're crafty.

    A friend of mine used to do balance transfers, and request higher than the actual balance owed which would then be paid out to him on closing old cards. $20,000 - $40,000 at a time.

    Its a cash advance basically, and as long as you're comfortable playing around with it you can essentially use that money in an offset somewhere else for gains (assuming the transfer is interest free and no one time fee…which unfortunately seems a bit more common as late).

  • +1 vote

    Some banks don't allow you to earn points over a certain amount of overpaid account.

  •  

    No problem doing this at all. My credit card has been overpaid for the last year or so and it has no impact on the functionality of the card in terms of earning points or anything else.

    I have one significant bill every year that hits my credit card that would otherwise be larger than its credit limit. I basically pay enough into the credit card prior to the charge coming so that it's covered.

  • +1 vote

    It may not make much of a difference to the cardholder but, banks being banks, i would assume they would charge the merchant fee % on the total amount spent on your card (and not just based on your card limit). I dont know if that's the case or not, but if it is, why not just offer to pay the merchant in two separate payments so they can save on that fee?

    •  

      Same reason BNPL is so popular now days? People don’t care about merchant fees, they just do whatever makes them happy

  • +1 vote

    I've never waited for my credit card bill to arrive to pay. I just estimate how much I spend and pay a bit more within a week of the expenditure to avoid getting hit with the interests.

    If all you want is to avoid paying interest, why not set up direct debit? I've had that going for ever and never been hit with late fees or interest.

    •  

      Credit card points maybe?

      •  

        Dunno. Not unless their credit limit is 10k (for example) and monthly spend is greater and they don't want to miss out.

    •  

      Not enough credit to spend if wait til the due date. And sometimes it takes more days to clear the payment.

  • +1 vote

    the only trouble ive come into with this is when ive put excess credit on my CC for a planned purchase, which didn't end up happening. I pulled the excess out (cant remember, cash or transfer or something) and i still got charged a cash advance fee/interest rate. i was pi$$ed as fudge cos it was my own darn money. Had to call the company to refund the cash advance interest rate. They were pretty tough too on their view they were in the right to charge me even though it was my money in credit >:]

  •  

    If you're putting the card into credit for just a short time you should be okay. Be aware though of some companies' practices re small credit balances - I had my 28 Degrees card in credit $5 for around a year then got a letter from Latitude to say they'd taken the money so that my card was no longer in credit. They didn't send it to me, or offer to transfer it into my bank account - they just took it. I got onto Chat with them and asked to get it back, saying that it was unethical to simply take it out of my account, and they basically accused me of using the account to fund terrorist activities or launder money, because in their opinion that's the only reason I would have kept the account in credit all that time! They did the same with my Go Mastercard, although that was only $2. They did give me the $5 back but I told them to keep the $2, god forbid I should be funding ISIS or something.
    Wonder what the going rate for an AK-47 is…. bet it's a lot more than my paltry five bucks.

    •  

      Reminds me a bit of the ATO, they hounded me for thousands of dollars in interest on late tax payments but when I paid off my HECS debt in full + an accidental extra 50c, they kept it with the excuse "could not contact individual, details not current".

    •  

      That's interesting. So it's ok to overpay a large amount but they'll take your money if you overpay something like $10 or less?

      •  

        I think it would depend on how long you left it in credit. Mine was in credit for over a year before they did anything.

  •  

    I don't have much to add to answer your question, but I do have an anecdote.
    I had a card which I stopped using, but got a credit to it (can't remember what it was for), for like $28. This balance was sitting on my account for about 6 months until I got a notice one day that the bank were going to send me a cheque to clear the balance. I still have the card, gathering dust somewhere.
    (Note: I am in the US so hence the cheque rather than something actually convenient like a direct deposit)