Disadvantages to Creditor

• Credit card companies and other lenders of lines of credit make money when you buy items on credit and let interest accrue on the balance. Prepaying can theoretically prevent any finance charges if you prepay the entire line, meaning the company loses money on your account. Also, it turns a creditable account into a prepaid account. The credit bureaus do not report prepaid accounts because they are poor at predicting a borrower's future borrowing habits.
  
  

Risks

• Most borrowers do not prepay lines of credit to use it like a debit card. Your payment could get lost in the shuffle. If the creditor loses track of your overpayment, you could have a tough time getting that money back. In some cases, you might have to sue the creditor to force him to repay your claim.
  
  

Benefits

• Contact your credit card company to see if it allows overpayment. Most companies put their customer service number on the back of their credit card. If the creditor allows, then you can use the account to build credit while it basically becomes a debit card. If the overpayment is a mistake, you can ask the creditor to return the excess funds via check at the end of the billing cycle.
  
  

Alternative

• When the creditor disallows prepayment on a line of credit, you can do the next best thing -- pay the balance as soon as the transaction shows up on your account. However, check with the creditor and your bank and ask if you can make multiple payments a month. Some creditors or banks charge a fee for too many payments. You could go with a secured credit card. This requires collateral on the limit, but secured cards tend to charge more in interest than an unsecured card, because most borrowers that apply for a secured card have bad credit. Also, purchases are deducted from the limit, not the deposit, so you still must make monthly payments.