What Is a Negative Balance on Your Credit Card?

While seeing a negative amount on your credit card statement may feel jarring, a negative credit card balance is rarely anything to worry about. If you’re concerned that the negative number may be inaccurate, contact your financial institutions customer service department for clarification. Otherwise, you can request a cash refund or just keep using your card like usual. Credit card statement balances represent how much a cardholder owes to a credit card company. Purchases, cash advances and balance transfers add up to a monthly statement balance.

  • Here are some key reasons why you should aim to avoid getting stuck with outstanding credit card debt.
  • A negative balance on your card obviously won’t increase your credit utilization ratio, but it won’t help it either.
  • This is one of those times that a negative could be a good thing.
  • Most credit models consider negative balances equivalent to a $0 balance, which means negative balances don’t hurt credit scores.

If you make online payments through the credit card’s website, the issuer will generally keep you from paying more than your credit card balance. You can also usually avoid this issue by setting up autopay to automatically withdraw either the full account balance or the minimum required payment. If you notice https://1investing.in/ a negative balance on your credit card, it means the card issuer owes you money and has posted a credit to your account. This can happen when you overpay your credit card bill or return an item using your credit card. Once you spend the credit amount, the negative balance will disappear from your account.

What Is a Negative Balance on a Credit Card?

A negative credit card balance, also known as a credit balance, means that your card issuer owes you money. A negative balance is created when you pay more toward the account than you owe. A statement balance is an amount the cardholder owes from the purchases, cash advances or balance transfers made within the last monthly billing cycle. Current balances show how much the cardholder owes in total, to date. Card payments typically take a few business days to process, so online current balances may not change immediately after payment. But negative balances are amounts that the card issuer owes to the cardholder—usually a positive thing for a consumer.

  • Any time a negative dollar amount shows up on a credit card balance, it means the bank owes the account holder money.
  • If you’re working with a cash-back rewards credit card and prefer to use the rewards as statement credits, you can mistakenly apply too many rewards to your balance.
  • In every single month that you get stuck paying a credit card bill for past purchases, you’re going to have less money left in your checking account to spend on anything else.
  • It may be easier to spend the negative balance, particularly on a credit card that you use often.

If balance transfers and debt loan consolidation aren’t options for you, a passive alternative is to better manage expenses. Charting your expenses, budgeting and reducing them in areas can increase your purchasing power, enabling you to pay off larger portions of the debt. Some techniques I have used to manage my expenses are to create a list of monthly expenses and use budgeting apps to see where additional costs can be removed. If you have other accounts with the card issuer, you will still have access to your online account and can request a refund through your online portal. If not, you must call the number on the back of your credit card or visit a local branch. You can use this overpayment strategically if you plan to use more than your credit limit on a large purchase (or a group of purchases that add up).

If you’re not lucky enough to have a negative balance on a credit card and instead find yourself struggling with credit card debt, Tally† may be able to help. By combining your credit card debts into a lower-interest line of credit, you can pay off your debt quickly and take control of your financial future. The Truth in Lending Act lays out how lenders should handle this situation. And it requires that they make a good faith effort to refund the money. Your card issuer may offer refund requests online or over the phone and may honor a request even if you’re only an authorized user on the account. At a minimum, you can call your credit card issuer to ask about refund options and then follow up with a written letter outlining your request.

What Happens to Credit Card Debt When You Die?

A negative credit card balance means you’ve overpaid the amount due on your bill. Unlike checking or savings accounts, where overdrafts can cause your account to go negative, credit cards get a negative balance when there’s too much money paid back vs. what’s due. This typically happens when refunds or payments have resulted in a $0 balance first and subsequent refunds or payments post after. A few conditions might cause a negative credit card balance, but it’s not a bad position to be in.

For instance, if you have a -$50 balance, you can simply apply it to future purchases. Once you make $50 in purchases, your balance will return to $0, or it could reduce your next bill by $50. Again, you’ll need to ask the card issuer about the procedure for obtaining a refund.

From reviews to news coverage, she aims to help readers make more informed decisions about their money. Dashia was previously a staff writer at NextAdvisor, where she covered credit cards, taxes, banking B2B payments. She has also written about safety, home automation, technology and fintech.

This makes it easy to see how much credit you have available — and how much you still owe. For example, if you had a $100 negative balance and proceeded to spend $150 with the card in the next billing cycle, you’d receive a bill reflecting that you owed only $50. The card issuer will use the credit showing on your account to offset future charges. This explanation is unusual, so you may want to verify with your card issuer that your negative balance is correct before assuming the credit on your account is really yours to claim.

What are credit card cash back rewards?

For closed accounts, this will typically be done via check or money order. Credit card companies are not out to keep hard-earned cash you don’t owe them. If you end up with a negative balance on your credit card, you can kick back and wait for the credit card company to handle it. Though the credit card company has your extra cash, it won’t hang on to it and refuse to give it back. One way or another, you will get this cash back — either in the form of a refund payment from the credit card company or by simply using your credit card to zero out the balance.

Before taking action, verify the overpayment has been cleared by your bank and has been applied to your credit card account balance. Your card issuer might have a policy of returning any overpayment that would create a credit balance. Check also for pending transactions that could wipe out the negative balance, putting you back at, or close to, a positive balance. If you aren’t having any luck with balance transfers due to bad credit, draft a plan to pay off the debt.

Your payment history, credit utilization ratio, credit variety and length of credit history impact your credit score. A negative balance is typically interpreted as a $0 balance, which will have a neutral impact on your credit score. If you notice your credit card balance has dipped below zero, don’t panic. A negative balance on a credit card is typically the result of an overpaid bill and is easily rectified. You won’t owe any payments on your credit card until your balance exceeds $0. Sometimes, a refund you receive for a returned purchase could go through after you’ve already repaid your credit card balance.

Even though it might take a few more steps to get it, negative balances are still money owed to you. If you pay more than you owe on your credit card statement balance, you’ll have an overpaid credit card. It can happen if you accidentally overestimate what you owe on your credit card or make multiple manual payments monthly. Daron, a negative balance on your credit card statement’s account summary is no occasion for concern.

See a negative balance on your credit card? Here’s what you can do about it

However, an accidental overpayment could leave you with a negative balance—also called a credit balance—that your card issuer owes you. Most of the time, a negative credit card balance won’t cause any issues. However, if the amount is significant, your credit card issuer might suspect fraud. A large overpayment can be a sign of money laundering or someone attempting to get refunds for stolen items. A negative balance on your credit card isn’t some form of trickery. This can happen if you overpay your bill, you get a refund on a purchase after paying off your balance or if you apply too many rewards all at once.

How to Use a Credit Card Wisely

These personal loans combine debt across multiple cards into one overall debt, with interest rates usually lower than those on credit cards. You can either spend money on your card (the easiest) or ask the card issuer to send you a refund of the negative balance. A negative balance doesn’t hurt your credit, but it doesn’t help it either. Most commonly, a store has an extended return window but may only allow returns to be processed to the original form of payment. If you’ve closed your credit card account and later received a credit, there is no need to worry. This is still your money, and you are entitled to receive a refund.

For example, let’s say you have a negative balance of $50 on your credit card. Then, you go out and use your card to pay for an $80 dinner with friends. Your credit card balance would then reflect an owed balance of $30. You can also call the credit card company or send a certified letter to expedite the refund process. In this instance, the credit card company has seven business days to initiate a refund.

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Before submitting the request, make sure your address and phone number are current on the account, as these will be the only ways your credit card company can confirm your request. Depending on your credit card provider, there may be a few different ways to resolve a negative balance on your credit card. Just like when you initiate a credit card refund, reversing a fraudulent charge on your credit card may bring your balance into the negative.

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