Overpaid on credit card and now the bank is reversing it. What should we do next?
We (my wife and I) accidentally overpaid on one of our credit cards. We paid $70.03 more than we owed, so we now have $70.03 in “To Be Budgeted” and the credit card account is red for $70.03 as expected.
However, my wife called the bank and they are refunding the payment. I am not exactly sure if they are refunding the whole payment, or just the extra $70.03.
This will appear as a deposit into our checking account (that was used to pay on the card), but I am unsure how it will appear on the credit card.
Should I leave the $70.03 alone in TBB until we find out how it resolves in the credit card account? Should I just budget the $70.03 to the credit card to fix the red balance, and then create a balance adjustment on the credit card when the correction is made?
Hi, Matt! Once you follow Move Light Sound Life's suggestion to assign the $70.03 from To Be Budgeted to your Credit Card Payment category, you'll see that it gets back in line at $0. :) The red is there because when overpayments are made, more money is sent to the credit card company than was set aside for the payment in your budget.
When you see your credit card processor issue you a refund, simply enter a transfer from your credit card account to your checking account for the $70.03. You'll see your credit card account balance go down to $0 with the outflow and the money will show up in your checking account as an inflow. Nothing will change in your budget because you're simply transferring money from one budget account to another.
Check out this article on how a Credit Card with a Positive Balance works for more details.
Move Light Sound Life and Dela , thank you very much for getting back to me. I followed the previous suggestion of moving the $70.03 that ended up in TBB due to overpayment into the Credit Card Payment category.
Today, the refund has posted to both accounts. It is a deposit into the Checking account and a charge on the Credit Card. They refunded the full payment, not just the amount that was overpaid.
How do I categorize both the deposit into Checking and withdrawl from the Credit Card?