The Risk of overpaying your credit card dues
You may wonder who overpays credit card dues however there are people who do that and there are hackers who use this trick to scam people so read on.
What is the purpose of a credit card?
Different people use credit cards for different purposes. Some use it to shop now and pay later when their salary arrives in their bank account. Some use it to get the discounts or promotions their credit card offers.
Believe me this is a big trap that many fall for at one time or the other. It is very tempting to see your favorite shop or online portal giving you a discount of a few percentage points for using your credit card but more about it later.
I have also seen people being encouraged to use a credit card because of the reward points that the card offers.
So different users have different reasons for using the credit card
The real purpose of a credit card
A credit card at the end of the day is a credit tool that uses a line of credit that is extended to the owner of the card. This limit may vary from person to person and is known as the credit card limit
What kind of credit limit your bank or credit card company extends to a user depends upon the relationship and credit score.
Different people different credit card payment behaviors
There are people who pay their credit card dues right on the last date of payment so as to maximize the credit timeline to the extent they can.
Then there are those who pay their credit card bills as soon as they get the salary credited to their account. There are the types who are paying up their credit card bills just around or after the first of every month even though the due date may be around the 15th.
There are those who pay the amount as soon as they swipe the card so that they do not miss the payment due date.
As compared to these there are the users who always pay only the minimum amount and let the balance build up.
There are the people who are doing a lot of damage to their financial health and end up paying huge interest on their credit card spends.
They are entering a never ending cycle of high interest debt that is so very difficult to get out of.
However there are another type of people who pay way beyond the amount that is due.
I know of a friend who forgot that he had paid his credit card due amount and ended up paying twice.
If this happens once it is something that can be overlooked.
However some credit card companies have a policy to refund such an additional amount.
If there are large amounts that are being over paid to the credit card company then there are chances that the credit card company may start looking at your account and its activity with a fair deal of suspicion.
The first reason is that a credit card is not a savings account where you can park your money.
So this paying of additional funds is seen as suspicion and the red flag over here is that if some kind of money laundering is being carried out using the credit card account.
Some smart hackers make use of over payments for international payments.
They would try to do this on compromised accounts.
They would like to do an overseas transaction where no OTP verification is required.
This has been reported in India
So in order to counter these moves some banks have started to return surplus amounts that are paid over and above the amount the payments are made.
Banks like
- HDFC Bank
- SBI and
- AXIS bank returns the overpaid amount.
If you have extra money do not pay it to the credit card company
A better place to use your money would be to buy some leo tokens and power up in the LPUD
I have powered up and urge you to do the same.
Final thoughts
Few people do these over payments and if you are one then stop doing this. The other side of the coin is that if you have not done such a thing and find some extra payment available to your card then investigate.
There are chances that your card may be compromised or being targeted by hackers.
Are you aware of overpaying your credit card dues ?