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It’s never a good feeling to look at your credit card statement and wonder, “What is this charge on my credit card?” When it comes to fraudulent credit card charges, your bank can be helpful. They have methods for spotting activity that isn’t normal, and they’ll usually alert you when a charge seems suspicious.

That said, your bank might not catch everything, and there may be a charge that’s valid but the amount is incorrect. So it’s important that you, too, keep an eye on your credit card statement to catch these errors and report anything wrong immediately.

Here’s what to watch out for and tips for handling a dispute.

What Are Fraudulent Credit Card Charges?

Credit card fraud can happen if someone steals your card or the information on your card, or hacks into your account. Someone could do so by stealing your physical card, skimming your card information at a credit card terminal, through phishing scams via text or email, or by stealing your mail. Fraudsters then use the information they’ve stolen to make unauthorized purchases on your credit card.

Most cards offer zero liability on fraudulent charges, meaning you won’t be responsible for covering charges you didn’t authorize. This is an important feature of how credit cards work. However, it’s important that you catch fraudulent charges early so you can report them quickly and minimize your liability.

Recommended: Tips for Using a Credit Card Responsibly

Detecting Unauthorized Credit Card Charges Early

The key to spotting unauthorized charges on credit cards is remaining vigilant and always checking your credit card statement each month. When you receive your statement, follow these steps:

•   Review statements immediately. Avoid letting a few months of credit card statements accumulate before checking them. Whether you look them over online or via hard copy, do so ASAP so you can catch any errors and head off fraud as quickly as possible. Going through your statements regularly will also offer a clearer understanding of how credit card payments work.

•   Check every purchase. Fraudsters know that small unauthorized credit card charges are less likely to get flagged. Go down the list of purchases you’ve made on your card over the last month and make sure you recognize the merchant and can match the sale with an item or service you bought.

•   Keep receipts. Hang on to receipts from credit card purchases so you can match them up to the items in your statement. This can also help if you’re unsure of how to identify a credit card transaction.

Fraudulent Credit Card Charges vs Billing Errors

Fraudulent charges are a result of theft. However, sometimes you may be charged for something that was due to a billing error. For example, perhaps you were charged twice for an item, or you were charged for goods or services that you never received.

Other billing errors could include:

•   Unauthorized charges, for which federal law limits your liability to $50

•   Charges that list the wrong date or amount

•   Errors in math

•   Charges for goods or services that you didn’t accept or weren’t delivered as agreed

•   Failure to post payments or credits, such as after you’ve returned an item.

You can correct these errors using procedures laid out by the Fair Credit Billing Act (FCBA). If a charge is found to be made in error, your credit card company will carry out a credit card chargeback, reversing the charges.

Reporting Unauthorized Credit Card Charges

Procedures for reporting fraud and billing errors are slightly different.

If you suspect fraud, you’ll take the following steps:

•   Contact your card issuer immediately. Tell them you suspect that you’ve been a victim of fraud. Your issuer can then investigate the charge.

•   Ask for your accounts to be suspended or closed. Also ask to be issued a new card. Change passwords and personal identification numbers (PINs) on your accounts.

•   File an identity theft report with the Federal Trade Commission (FTC). You can do so at Identitytheft.gov.

•   Contact the three credit bureaus, Equifax®, Experian®, and TransUnion®. Confirm your identity with them and check your credit reports for any other fraudulent activities. Consider having a fraud alert connected to your accounts.

If you’re disputing a billing error, first call your credit card company and alert them to the error. The credit card company will investigate. If they find there was an error, your account will be corrected, and you will not pay credit card purchase interest charges on the amount for which you were billed.

In addition, send your credit card company written notification of an error. Use FBCA procedures to dispute the credit card charges, including the following steps:

•   Contact the creditor at the address they provide for billing inquiries. This address may be different from the one to which you send payments. Include your name, address, and account number, as well as a description of the billing error you’ve spotted. You may be able to proceed online or by phone as well as through the mail. The FTC provides a sample letter that you can use as part of the process.

•   Include copies of receipts and other supporting documents.

•   Be sure to mail your letter within 60 days of the first bill you received that contained the error.

•   Send the letter by certified mail and ask for a receipt so you can be sure your creditor received it.

•   Keep a copy of the dispute letter.

How to Read Your Credit Card Statement

It’s important to get familiar with how to read your credit card statement. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) requires that each of your credit card statements includes certain pieces of information.

•   First, there should be a section that includes your account information. This is where you’ll find your name, account number, and the date of the billing cycle.

•   Next, the account summary is an overview of transaction information on your card. This section will include the payment due date, any payments or credits that have been applied to the account, any fees that have been charged to you, and the total amount of your account balance.

•   Following this summary is a detailed account of the purchases you’ve made over the billing period. Each line item will include the vendor name, the date the purchase was made, the category (such as “groceries”), and the amount that was charged to your card. Go through this section carefully as you look for fraudulent charges or errors.

•   Your statement will include other sections that detail payment information, interest or credit card finance charges, rewards, and account fine print.

Credit Card Security and Fraud Protection

When you apply for a credit card, look carefully at the security measures the card issuer has in place. Credit cards, such as credit cards offered by SoFi, can have a variety of measures to keep your information safe and protected from fraud.

Fraud protection limits your responsibility and liability for fraudulent charges. Many banks offer $0 liability. The FCBA limits liability to $50 for card-present fraudulent charges, and $0 if the card is not present, such as for online charges made with stolen credit card information.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

The Takeaway

Fraudulent charges or billing errors can be an unfortunate part of having a credit card. Your bank may catch them, but it’s also important to be proactive and keep an eye out for fraud and errors on your credit card statement. Bringing these issues to the attention of your credit card company will help you get the issue sorted faster and head off potential future fraud.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

How do I file a fraudulent charge claim with my credit card company?

If you spot a fraudulent charge on your credit card statement, call your card company immediately and ask them to investigate. You can also request that your card be suspended or closed and ask for a new card. The credit card company can walk you through the charge dispute process.

How do I find out where a charge came from?

You can see where a charge was made in the detailed purchase information provided on your credit card statement. If you don’t recognize the merchant’s name, do an online search using the name that appears on the statement. Merchants sometimes process transactions through third parties or a parent company.

How do I look up a charge from my credit card statement?

If you’re unsure about a charge on your credit card statement, call your credit card company, which may be able to do a credit card charge lookup by the merchant name.

Photo credit: iStock/Pekic

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

This article is not intended to be legal advice. Please consult an attorney for advice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

SOCC-Q126-057

If you’ve been holding onto all your credit card statements, here’s some information that could help organize your paperwork: In general, you only need to keep credit card statements for 60 days. Holding onto them for that long gives you time to review the charges to make sure everything is accurate.

However, there may be reasons to keep credit card statements longer, including for tax purposes.

Since different scenarios may require different rules on the timing, this guide will help you determine how long to keep your credit card statements, depending on the situation.

Why Should You Keep Your Credit Card Statements?

Aside from your credit card statement balance, your credit card statements contain helpful information that can come in handy — especially during tax season. When payments are made by credit card, it’s possible to review old statements to look up business expenses (such as mileage) or other potential tax write-offs like mortgage interest and student loan interest.

Keeping credit card statements also allows you time to carefully review them for errors or signs of fraud. It’s easy to overlook mistakes when quickly reading a credit card statement while you’re sorting the mail. It can be valuable to take the time to go over them more closely.

Online vs Hard Copy Statements

If you want to cut back on the amount of paperwork you have to deal with, you can opt to get your statements online. Credit card issuers may store this information for at least one year.

The exact length of time your records are stored will vary by financial institution. Some credit card issuers provide the past 12 months of statements, while others hold onto up to seven years’ worth. Check with your credit card issuer for their specific timeline.

If you want to keep the digital copies of your statements, you can download them and store them on your computer.

Factors That Determine How Long to Keep Credit Card Statements

Like the rules about keeping financial documents in general, how long to keep credit card statements depends on each consumer’s unique needs. But a good rule of thumb is to keep them at least 60 days to have enough time to review them for signs of erroneous charges or fraud.

Under the Fair Credit Billing Act (FCBA), consumers must notify credit card issuers in writing about any errors on their credit card statement within 60 days of the date the statement is sent out. This is another reason to keep your statements for at least 60 days.

If you use your credit card for purchases that might be tax-deductible and you use your credit card statements as documentation, you should hold onto the statements for up to seven years, just in case the IRS has any questions.

How Long Should You Keep Your Credit Card Statements?

How long you need to keep your credit card statements also depends on whether you’re a consumer making purchases for yourself with your card, or a business owner making business purchases. Here’s what to know.

For Consumers

As noted, it can be helpful to keep your credit card statements for at least 60 days due to certain credit card rules. Consumers must notify credit card issuers in writing about any errors within 60 days of the date the statement is sent out.

However, you may want to keep your statements for longer in the following scenarios:

•   If you use your statements when making deductions on your taxes: In this case, the IRS recommends keeping statements for up to seven years. That way, if you’re ever audited, you’ll have the statements as supporting documentation for deductions.

•   If you dispute charges: If you’re disputing charges on your credit card, it’s best to hold onto the statement in question for at least 90 days, since that’s how long the dispute process can take.

•   If you want to track your spending: Individuals looking to learn more about their spending habits may find that holding onto a year’s worth of statements is helpful. That way, you can sit down on January 1 and get a clear picture of how you spent your money over the past 12 months and where you might cut back. This can help with learning to use a credit card responsibly.

•   If you have an extended warranty: It’s also helpful to hold onto statements that contain purchases that have extended warranties from the credit card issuer. For example, if you buy a TV with a three-year warranty, the credit card issuer may offer an extended extra one-year warranty as a cardholder benefit. Keep that statement at the ready as a proof of purchase in case the extra warranty is needed.

For Business Owners

Business owners may benefit from holding onto credit card statements for at least a year in order to track business expenses. In the case of credit cards used for tax purposes, it’s wise to keep credit card statements for at least seven years to help resolve any future tax issues that may arise.

When You Should Keep Credit Card Statements Longer

If you’re disputing charges on a credit card, it’s wise to keep statements with the charge in question for at least 90 days since that’s how long the dispute process typically takes.

If you’re tracking your spending over the long term to come up with a budget, you may want to keep up to a year’s worth of credit card statements to review

And if you use your credit card statements as backup for claiming deductions on your taxes, you’ll want to keep your copies of the statements for up to seven years.

Recommended: What is the Average Credit Card Limit?

Different Ways to Store Statements

Because credit card statements contain sensitive personal and financial information, it’s important to keep them safe when storing them. Storage methods to consider include:

•   In a protected file on your computer: If you download a digital copy of your statements, you can store them in a password-protected file on your computer.

•   In a safe: If you are holding onto hard copies of statements, you can keep them in a locked, fire-proof safe to help prevent theft or damage.

Different Ways to Dispose of Statements

Once you are ready to throw out your credit card statements, it’s important to destroy them properly so that no one can get your personal information from them.

Shredding old documents is the easiest and most effective way to do this. If you don’t have a shredder, you may want to invest in one since you can use it for other sensitive documents you’re getting rid of as well. Otherwise you could take the old statements to a professional shredding service.

If you have digital copies of credit card statements, delete the files from your computer — including any backup copies. Then empty your computer’s trash.

Managing Online Statements: What to Know

You can store online statements in a file on your computer, ideally with password protection. Then you can access them whenever you need them. Just download the new statements each month, label and date them, and put them in the protected file for easy reference.

Recommended: What is a Charge Card?

The Takeaway

How long you should keep your credit card statements depends on your specific needs, but 60 days is generally a good rule of thumb. There are exceptions, however.

If you have an extended warranty through your credit card issuer, it makes sense to keep the statement with the warranty for the length of the warranty in case you need it. And if you’re disputing a charge on any of your statements, it’s a good idea to hang onto them for 90 days, which is how long it takes to resolve a dispute. Finally, if you use the statements to help with your tax deductions, it can be a good idea to hold onto them for up to seven years in case any questions arise.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

How can I get old credit card statements?

Credit card issuers typically keep credit card statements online for at least one year and up to seven years. Log into your online account and see if you can access the statements you need. If not, you can call your credit card issuer to request them.

Do you need to keep credit card receipts?

In general, there’s not typically a need to keep credit card receipts long term (unless they are business expenses and you need the receipts for your taxes). Your credit card statement contains information about the purchase — including the item, the merchant, the date you bought it, and the price you paid —should you need it later.

Just hold onto the receipt until the transaction appears on your credit card statement. That way you can check the information on the statement against the receipt and verify that everything is correct.

How long should you keep credit card statements with tax-related expenses?

If you use your credit card statements to help figure out tax deductions, you should keep old credit card statements for up to seven years. That way, if the IRS has questions about deductions, you will have the documentation to back them up.

How can you keep digital credit card statements safely?

If you download digital copies of your statement, you can store them in a password-protected file on their computer. Once you no longer need the statements, fully delete the files from your computer.

Photo credit: iStock/Rawpixel

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOCC-Q126-033

A credit card skimmer is an illegal, hidden device attached to payment terminals to steal card information during legitimate transactions. Criminals can use the stolen data to make unauthorized online purchases or create counterfeit physical cards.

These devices can be difficult to detect and cost consumers and financial institutions an estimated $1 billion per year, according to the FBI. Here’s how skimmers work, how to spot them, and what to do if your card is compromised.

What Is a Credit Card Skimmer?

Credit card skimming is a form of theft that occurs when someone installs a small electronic device inside or on top of a card reader. When a credit card is swiped, the device captures sensitive information such as the cardholder’s name, card number, and expiration date.

Skimmers are most often placed on unattended or low-visibility terminals to avoid detection. Primary targets include outdoor ATM machines, gas station pumps far from the attendant, and self-checkout payment terminals in stores.

Identifying Credit Card Skimmers

Knowing how to spot a skimmer can help you avoid this common type of credit card fraud — especially when using outdoor or isolated payment machines. Use this quick checklist before you swipe:

•   Inspect the card reader: Look for parts that appear crooked, loose, off-center, or that cover graphics or arrows normally visible on the machine.

•   Compare nearby terminals: If one reader looks newer, bulkier, or misaligned compared to others, it may have been tampered with.

•   Test the keypad: A raised, spongy, or flimsy keypad could indicate a fake overlay has been installed.

•   Check security seals on gas pumps: When paying at the pump, look for security tape over the cabinet panel. If it’s torn, broken, or says “void,” choose another pump.

•   Watch for hidden cameras: Some skimmers are paired with tiny cameras to capture PINs. Look for suspicious pinhones or attachments above the keypad.

What Happens When a Credit Card Is Skimmed

When a skimmer reads the magnetic stripe on a credit card, it can capture:

•   Cardholder name

•   Card number

•   Expiration date

•   CVV number

The stolen data is either stored internally for the thief to retrieve later or transmitted wirelessly using technologies like Bluetooth to a nearby device. Once a thief has your credit card information, they can use it to:

•   Make unauthorized online transactions

•   Create counterfeit cards for in-person purchases

•   Sell stolen data bulk on the dark web

•   Use the information to commit broader identity theft

Protecting Yourself From Credit Card Skimmers

Skimmers aren’t always easy to detect, but these habits can greatly reduce your risk:

Use Supervised Terminals

Whenever possible, choose payment terminals that are in clear view of staff, cameras, or heavy foot traffic. Generally, the more visible the terminal, the less likely it is to be compromised. Busy locations naturally discourage tampering because criminals tend to prefer machines they can access without being noticed. When using a gas station pump, consider paying inside the store if the station appears quiet or poorly lit.

Tap or Dip Whenever Possible

Credit cards today typically come with an EMV chip that allows you to make payments without actually swiping your card. Generally, the safest option is to “tap to pay,” but if contactless payments aren’t available, your next-best option is to insert your EMV chip card rather than swiping the magnetic stripe.

While credit card “shimmers” (high-tech devices that steal data from a card’s EMV microchip) do exist, chip transactions are still significantly more secure than swiping.

Sign Up for Alerts

Many card issuers allow you to sign up for real-time alerts via text, email, or app notifications. You may be able to receive alerts for:

•   Every transaction

•   Purchases over a set amount

•   Suspicious or unusual activity

Immediate alerts help you catch fraud quickly and limit damage.

Check Your Accounts Regularly

Review your transactions at least monthly — weekly is even better. Criminals often use stolen card data infrequently or in small amounts to avoid detection, so consistent monitoring is key. The sooner you spot suspicious activity, the easier it is to report the issue and prevent additional fraudulent charges.

Recommended: How to Protect Your Credit Card from Hackers

Can You Get a Refund if Your Card Gets Skimmed?

Typically, yes — especially if you report the fraud quickly.

Under federal law, your liability for unauthorized credit card charges is capped at $50 if you report the fraud within 60 days of receiving the statement showing the charge. Many credit card issuers go even further with zero-liability policies, meaning you may pay nothing at all.

If you think your credit card has been skimmed, reach out to your card issuer right away. The company will likely lock your card, send you a new card with a new number, and issue temporary (provisional) credits for any unauthorized transactions while the investigation is ongoing. If the investigation confirms the transactions were fraudulent, the credits become permanent.

The Takeaway

Credit card skimming is a real and ongoing threat, but simple precautions can dramatically lower your risk. Smart steps include inspecting payment terminals for signs of tampering, prioritizing chip or contactless payments, enabling alerts, and monitoring your accounts regularly. If you ever suspect your card has been skimmed, contact your card issuer immediately — federal protections and issuer policies are designed to shield you from major financial loss.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

What does a credit card skimmer do?

A credit card skimmer is an unauthorized electronic device designed to illegally capture information from the magnetic stripe of a credit card during a legitimate transaction. This stolen information — including your name, card number, expiration date, and CVV — can then be used by thieves to create counterfeit cards or make fraudulent online purchases.

Are card skimmers illegal?

Yes, card skimmers are illegal. The installation and use of card skimmers violate various federal and state statutes, and perpetrators can face serious felony charges for fraud, identity theft, and possession of these devices.

How common is credit card skimming?

Credit card skimming is a persistent threat. While it’s difficult to get precise, up-to-the-minute numbers, the FBI has reported that card skimming devices cost consumers and financial institutions an estimated $1 billion annually. Skimming is most common at unattended terminals like gas pumps and outdoor ATMs, but efforts by banks and merchants to adopt EMV chip technology and contactless payment are helping to reduce the overall frequency of successful magnetic stripe skimming attacks.

Photo credit: iStock/greyj

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOCC-Q126-025

Credit card rewards that are related to spending generally aren’t taxable. However, some rewards — such as certain sign-up bonuses and referral bonuses — may be considered taxable income by the Internal Revenue Service (IRS). Confused? Don’t worry: Below, we break down when credit card rewards are taxable income and when they aren’t.

What Are Credit Card Rewards?

Credit card rewards are loyalty incentives — such as cash back, points, or miles — earned on eligible purchases. They essentially allow users to get a percentage of their spending back. These rewards accumulate over time and can typically be redeemed for statement credits, travel, gift cards, or merchandise.

Typical earnings structures offered by credit cards include:

•   Standard earning: Many cards offer a “base rate,” such as 1 point or 1% back for every dollar spent.

•   Bonus categories: Some credit cards offer “boosted” rates for specific categories like dining, groceries, or gas (such as 3% back on dining).

•   Welcome bonuses: New cardholders can often earn large lump sum rewards by meeting a minimum spending requirement within the first few months.

•   Referrals: Some issuers provide rewards for referring friends who successfully open an account.

Your cardholder agreement should outline the credit card rules for how to earn rewards using a specific credit card, as well as how to redeem them.

How the IRS Treats Credit Card Rewards

Generally, credit card rewards aren’t taxable, but there are exceptions. Here’s a closer look at which types of rewards may or may not be counted as taxable income by the IRS.

Rewards Treated as Rebates on Spending

Fortunately, cash back rewards and other rewards like miles or points generally aren’t considered taxable income when earned by making purchases. The IRS typically views these earnings as rebates, rather than income.

The trick is that the cardholder has to spend a certain amount to earn a reward in order for the IRS to not classify the rewards as income. For example, if a new credit card offers $200 in cash back when the cardholder spends $2,000 within the first six months of opening their account, that $200 would not be considered taxable income.

Rewards Considered as Income

Certain credit card rewards are considered income, however. The way to identify which rewards are taxable income is by looking at how they’re earned.

If the cardholder must spend money to earn rewards, those rewards typically are not considered taxable. But if the cardholder is given a $150 gift card simply for signing up or referring a friend for a new credit card, that $150 will likely be viewed as taxable income — because they didn’t spend any money to earn it.

When Are Credit Card Rewards Taxed?

Credit card rewards that aren’t earned through spending (such as some introductory bonus offers) can count as income that the IRS will expect the cardholder to pay income taxes on.

When Your Credit Card Rewards Are Taxable

Some scenarios in which credit card rewards may be taxable include:

•   If you received a sign-up bonus simply for opening a credit card account

•   If you earned a reward for referring a friend

When Your Credit Card Rewards Are Not Taxable

Credit card rewards earned from spending — such as cash back, points, and miles — are generally non-taxable because the IRS views them as rebates or discounts on purchases rather than income. As long as you must spend money to earn the reward, it is typically tax-free, regardless of the redemption method.

For instance, credit card rewards that are typically not taxable include:

•   Percentage-based cash rewards earned on daily purchases

•   Airline miles or hotel points earned from spending and used to book flights or stays

•   Sign-up bonuses that are earned after spending a specific amount within a set timeframe

Are Business Credit Card Rewards Taxable?

It doesn’t matter if the rewards are earned with a personal credit card or a business credit card — the same rules surrounding income taxes apply.

Where business credit cards can affect taxes is when it comes time to take tax deductions. For example, if someone bought $2,000 worth of equipment for their business and earned $40 in cash back rewards doing so, they can only deduct $1,960 on their taxes. In other words, they can only deduct the net cost of business expenses, which cash back reduces.

How to Know If You Owe Taxes on Credit Card Rewards

If you earn a reward without having to meet a spending requirement, the credit card company may report this as miscellaneous income. The IRS only requires a company to file a Form 1099-MISC when the income paid out is $600 or more (this threshold goes up to $2,000 for 2026).

Whether or not you receive this form, however, you’ll need to report all taxable income you receive, including taxable credit card rewards. To make doing this easier, it can be helpful to keep track of any credit card rewards not earned through spending. That way, if the credit card issuer doesn’t send a 1099-MISC, you can still complete your taxes properly.

Recommended: Can You Pay Taxes With a Credit Card?

Avoiding Taxes on Your Credit Card Rewards: What to Know

To avoid taxes on credit card rewards, you’ll want to stick to credit cards that offer purchase-based rewards. For example, if you’re in the market for a new credit card and comparing sign-up offers, you might prioritize cards that offer bonuses that are earned through spending over cards that offer rewards for simply signing up for the credit card.

The Takeaway

Credit card rewards earned from spending, like cash back or points on purchases, are generally viewed by the IRS as non-taxable rebates. However, rewards not tied to spending, such as sign-up bonuses for simply opening an account or referral bonuses, are typically considered taxable income. It’s important to track these non-purchase-based rewards, as you are responsible for reporting all taxable income, even if you don’t receive a Form 1099-MISC.

Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.

FAQ

Are credit card cash back rewards taxable?

Credit card cash back rewards are generally not taxable. The IRS typically views cash back earned from spending as a rebate or discount on a purchase, not as income. However, if you receive cash rewards (or other monetary bonuses) simply for opening a card or referring a friend, and not based on your spending, those amounts are usually considered taxable income and must be reported.

Are loyalty points taxable?

Reward points that are earned through spending are generally not taxable because the IRS considers them rebates or discounts on purchases. However, rewards earned without spending — such as some credit card sign-up bonuses and referral bonuses — are usually considered taxable income.

Are credit card rewards reported to the IRS?

Yes, they can be. Credit card rewards are generally reported to the IRS if they are considered taxable income. This applies to rewards not tied to spending, such as sign-up bonuses for simply opening an account or referral bonuses, which are viewed as miscellaneous income.

The credit card issuer may send you a Form 1099-MISC if the total taxable rewards you received are $600 or more (or $2,000 for 2026). However, you are responsible for reporting all taxable income, even if you do not receive this form. Rewards earned through spending, like cash back, are typically considered non-taxable rebates and are not reported.

Do you have to pay taxes on credit card rewards?

You generally do not have to pay taxes on credit card rewards earned through spending, such as cash back, points, or miles, because the IRS views them as non-taxable rebates or discounts. However, rewards not tied to spending are typically considered taxable income. This includes bonuses you receive simply for opening an account or for referring a friend. You are responsible for reporting this taxable income, even if you don’t receive a Form 1099-MISC from the issuer.

Photo credit: iStock/Grayscale Studio

SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOCC-Q126-003

If you unintentionally overpay your credit card bill, you may see a negative balance on your account. Although overpaying a credit card isn’t ideal — that cash flow could’ve been used toward another expense, after all — it’s usually not cause for concern.

If you overpaid your credit card, interest isn’t charged on the amount — in fact, that amount is owed back to you. What you do next, whether that’s requesting a refund or applying the overpayment to next month’s bill, is your choice.

How Credit Card Overpayments Happen

An overpayment on a credit card happens when you pay more than the total outstanding balance on your account. This is common and simply results in a negative balance, or credit, on your account

There are a number of ways an overpayment can happen. These include accidentally making a duplicate payment, getting a merchant refund after paying your balance, keying in the wrong amount when making an online payment, or redeeming rewards as statement credits. An overpayment won’t lead to any interest or fees, and you can easily resolve it by making new purchases or requesting a refund from your issuer.

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How You Could Have Overpaid Your Credit Card

Here’s a closer look at some common scenarios that can lead to a credit card of overpayment.

Making a Manual Payment

If you enrolled in automatic credit card payments but forget and also manually pay your bill, you might accidentally pay twice. Other ways a manual payment can lead to overpayment include accidentally adding an extra digit (e.g., typing $1,000 instead of $100) when entering the payment amount, or making a payment before the statement is generated, and overestimating the amount you owe.

Receiving Refunds

Another common scenario resulting in an overpaid credit card is if you return a purchase to a merchant or get a refund for a service. If a refund is processed after the statement balance has already been paid in full, or if the refund exceeds the remaining balance, you can end up with an overpayment on your credit card.

Statement Credits and Rewards

Redeeming cash-back rewards as a statement credit can lead to an overpayment if they are applied to an account that is already paid in full or has a low balance. Having a fee (like an annual fee) waived or reversed after you have already paid the bill, can also result in a credit balance.

How to Rectify Overpaying Your Credit Card

If your credit card balance is under $0, and you’re owed money back, there are a few ways to move forward.

Request a Refund

Under the Fair Credit Billing Act (FCBA), you have the right to request a refund if you overpay your credit card by more than $1. You can do this by sending a written request, calling the number on the back of the card, or going to the issuer’s website to request a refund

The credit card rules state that the issuer must give you a refund in the payment method of your choosing within seven business days of receiving your request. Additionally, it must, in good faith, make attempts to return unapplied overpayments that have been on the account for over six months.

Allow the Negative Balance to Roll Over Next Month

Another way to address a negative balance on a credit card is simply to do nothing. If you don’t explicitly request a refund, the bank will automatically apply the credit toward future purchases. The negative balance will act as a credit, reducing your balance until it returns to zero.

If your credit is greater than your new statement balance, your adjusted credit amount will roll over again. It will continue this way until you’ve effectively used all of your account’s overpayment credit or you ask for a refund.

Enable Autopay on Your Credit Card

If you’re not already enrolled in automatic payments, enabling autopay for your credit card bill can help prevent overpayments due to manual payment errors. Leveraging your card’s autopay feature is a responsible way to use a credit card since it ensures you pay the correct amount on your account on time.

Many credit card issuers allow you to set up autopay to pay either the statement balance (the amount owed from the last billing cycle) or the current balance (the total amount owed at that exact moment). You can also typically choose to pay the minimum payment or a fixed custom amount.

Does an Overpaid Balance Affect Your Credit Score?

An overpaid credit card balance does not negatively impact your credit. A negative balance is usually reported to credit bureaus as a “0 balance,” which keeps your credit utilization (how much of your credit limit you’re using) low. A low credit utilization ratio can positively impact your credit file. However, a negative balance does not have a more positive impact on your credit profile than paying your statement balance in full and having a zero balance.

The Takeaway

If you unintentionally overpay your credit card, you’ll have a negative balance, which is essentially a credit owed back to you by the issuer. This generally isn’t a problem and won’t negatively impact your credit. You have two main options for resolving an overpayment: you can contact your issuer to request a refund, which they must process within seven business days, or you can simply let the credit balance remain on your account and have it automatically applied to reduce your future purchases until the credit is used up. Setting up autopay can help prevent future overpayments.

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FAQ

What happens if I overpay my credit card?

If you unintentionally overpay your credit card, you’ll have a negative balance, which is a credit owed back to you by the card issuer. This overpayment won’t negatively impact your credit. You have two main ways to fix it: You can request a refund from your issuer, which they must process within seven business days, or you can simply allow the negative balance to remain on your account, where it will be applied as a credit to reduce future purchases.

Does a negative balance have an effect on my credit score?

A negative balance, or credit, on your credit card does not negatively affect your credit. Issuers usually report a negative balance as a “0 balance” to the credit bureaus. This keeps your credit utilization low, which is good for your credit file. However, carrying an overpayment does not provide an additional boost beyond simply paying your statement balance in full.

How long do you have to dispute a credit card charge?

You have 60 days to dispute a credit card charge, starting from the date it appears on your statement. The bank is legally required to acknowledge your dispute within 30 days of receiving it. A resolution must be enacted within two billing cycles or a maximum of 90 days from your dispute date.

How can I request a refund after overpaying my credit card?

You can request a refund for a credit card overpayment by sending a written request, calling the number on the back of your card, or by visiting your issuer’s website. Under the Fair Credit Billing Act (FCBA), the issuer must issue the refund in your preferred payment method within seven business days of receiving your request, provided the overpayment is more than $1. Alternatively, you can simply let the credit remain on your account, and it will automatically be applied to reduce the cost of your future purchases until the credit is used up.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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