What is a credit card credit balance?
Can you withdraw the credit balance on your credit card? We explain what it is and how to take advantage of the credit balance.
credit balance on a credit card appears when you make a payment for an amount greater than the amount you needed to make.
For example: imagine that the non-interest bearing payment on your credit card is $5,000, but you deposit $7,000, what happens to that $2,000?
There are many other situations surrounding the Credit Balance, in the following paragraphs we will analyze each detail, so that you can understand exactly what the bank will do with your money every time you “overpay”.
What is the Credit Balance?
The credit balance is the excess amount when you deposit more than the total balance of your credit card. Simply put, it is the money left over when you deposit more than you owe the bank.
Imagine that your credit card statement indicates that you have a total balance of $7,500 and you, on the payment deadline, deposit $9,000. Having covered 100% of your debt, the extra $1,500 will remain as a Credit Balance.
It will be until you use your plastic that they will automatically take your credit balance.
3 Common mistakes when you have a credit balance on your credit card
- Paying more than the necessary amount to “advance” monthly payments. Let’s say you make a purchase for $12,000 pesos at 6 months interest free, if you think the bank will apply that $4,000 “extra” to reduce your MSI expense you are mistaken. If you want to advance letters you will have to contact your bank and ask if this is possible.
- Save the surplus as savings. It is a common mistake to believe that it will be until your next payment date when the bank will take that excess amount and that in the meantime it will remain there. In fact, on your next purchase with the card, the bank may apply the credit balance. Your credit card account is not a savings account.
- Keeping a credit balance to “improve my credit history”. In reality, this will not generate a rating in your credit history, your good behavior when buying something on credit and paying in a timely manner will. Having a credit balance will not make a difference.
Can I use the credit balance on a credit card for interest-free purchases?
Unfortunately, no. Your product issuer will not do it for one reason: you told them you wanted time to pay. Think about it, why would you want to advance payments if you originally asked to pay off that $12,000 over six months?
What they will do is take the corresponding amount due during that period ($2,000 in our example) and the remainder will be considered a Credit Balance (unless you have purchases without MSI; in that case, the excess will automatically be applied to that other balance).
If you want the remaining balance to be used to advance your interest free payments, it is mandatory that you contact the bank and request it.
Can I deposit money to my card to increase my credit line?
Yes, you can. The bank will take 100% of your credit line and the cash you previously deposited, so your purchase will be effective.
For example, if you want a $6,000 cell phone but your credit line is $5,000, you can deposit the remaining $1,000 to your card to increase your limit and make my purchase.
But be careful, this will not work with an interest free purchase. Why? Remember that for MSI purchases, your available limit when you make the purchase must cover the total amount of the product and it will be released with each payment you make.
On the other hand, if you deposit to your plastic, the bank will not have the certainty that this amount (which at the moment covers the total of what you want to buy) will be on your card during the time it will take you to pay, because you could use it at any time.
Can I withdraw my credit card balance?
Yes, it is possible to withdraw the credit balance of a credit card at the teller window of any branch or through an ATM of your bank.
Is it convenient to have a credit balance on my credit card?
It is not that it is convenient or not, but that credit cards were not designed as deposit products, for that purpose there are other options such as savings accounts or prepaid cards.
And although you can deposit money to your bank plastic, you can never make deposits of more than 10,000$, as stated in the Federal Law for the Prevention and Identification of Operations with Resources of Illicit Origin, whose objective is to attack organized crime, such as money laundering.
Before depositing to your card to buy something, think about other alternatives such as requesting an increase in your credit line or, as mentioned above, paying a portion with cash.