Why Do I Have a Negative Credit Card Balance?

This refund could result in a negative balance if the credited amount exceeds your current account balance. Negative balances reflect what the card issuer owes you, the cardholder. Some credit cards provide cardholders with bonus rewards or statement credits based on select purchases.

Why Nearly Every Purchase Should Be on a Credit Card

1. The reason a negative card balance is mostly positive is that your negative balance probably means you overpaid for something at some point.
2. Once the negative balance has been used up, the cardholder may continue to make purchases or close the account if desired.
3. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear).

Think of it as the digital equivalent of finding extra cash you’d forgotten about in your coat pocket. Getting a refund from a merchant is another way you might end up with a negative balance. If you pay off your balance before getting a refund or if the refund is more than your current balance, that refund would result in a negative balance. Imagine you had a $500 account balance but you sent your card issuer a $900 payment by mistake. Your updated balance would be -$400 in this scenario thanks to the overpayment. For example, if you make an overpayment of $100 on your card and your credit limit is $500, you can temporarily spend up to $600 on your card.

What Happens When You Close an Account With a Negative Balance?

The temporary increase of a negative credit card balance can also lower your credit utilization, potentially boosting your credit score. But negative balances are amounts that the card issuer owes to the cardholder—usually a positive thing for a consumer. A negative balance usually means the cardholder has received a refund for a purchase, a reversal for a fraudulent purchase, a credit card reward or a statement credit.

But no matter the cause of the negative balance, it is usually a positive scenario for the consumer. 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. In some situations, a cardholder may find a negative balance, meaning the credit card company owes money to the cardholder. This extra credit shows up with a minus symbol in front of the dollar amount (e.g. -$500). While seeing a negative amount on your credit card statement may feel jarring, a negative credit card balance is rarely anything to worry about.

A merchant issued a refund

Some credit card payment portals prevent payments from exceeding your total balance. However, you may still overpay if you have autopayments set up but accidentally pay manually as well. Cardmembers who use checks or other manual payment methods may also accidentally exceed their outstanding balance.

On one hand, you could do nothing and use your card as you normally would. A negative balance on your credit card is potentially a sign that you’ve overpaid what you owe. For example, let’s say your credit limit is $5,000 and you have a negative balance of $100. It just means that you can charge up to your existing credit limit plus the negative balance. If a credit card fee is charged to your account and waived, for whatever reason, it could possibly result in a negative balance. But if you do have one, it could have happened for a variety of reasons.

People purchased flights with their credit cards and paid off their credit card balances afterwards. When you make a return to a merchant, it will generally send a refund to the credit card you used to make the purchase. If the refund is larger than your account balance, you could end up with a negative credit card balance. When you first see it, the term “negative balance” can make you think you made a mistake like forgetting to pay your credit card balance.

You will not pay interest on any negative balance and it can be used to offset future spending on your credit card. Maybe you have free ATM fees when you use out-of-network ATMs, and the charged fees were returned to you. Or maybe you could negotiate with your card issuer to get reimbursed for your card’s annual fee. These (or the credit of any other fees) could result in a negative balance on your credit card. Rewards redeemed for statement credits lower your monthly balance but do not count as a regular payment.

Many credit card companies allow you to check your real-time credit card balance online or through a mobile app. Discover offers online and mobile banking, which could help you confirm whether you have a negative balance. Your statement balance shows the amount you owe or the status of your account at the end of each billing cycle. A negative statement balance applies to the previous billing period. Before you take any action to address your negative balance, you may want to confirm that you’re looking at your current balance.

While you don’t have to worry about a negative card balance hurting your credit score, a few actions could bring it back to zero. Read on to learn how to respond if you notice your credit card balance falling into the negatives. At first mention, negative balances give off a negative connotation. You may think something is wrong, when in fact it is quite the opposite. But keep in mind that negative balances reflect money owed to you by your credit card company. It may be due to a refund from a third party, or a statement credit from your credit card issuer directly.

If your credit balance reaches the negatives, that also means your account is likely in good standing without credit card debt. So, while a negative balance itself doesn’t affect your credit score, it usually indicates positive credit habits. If you see a negative balance on your credit card statement, don’t panic. A negative credit card balance means your credit card provider owes you money, not the other way around.

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So, when airlines canceled flights and started to issue refunds, many people wound up with negative credit card balances as a negative balance on credit card result. Still, you may be less than thrilled to have your money tied up in a credit card account. So, we’re breaking down the best things to do when you find yourself with a negative credit card balance. We’ll cover the different things you can do, all requiring varying degrees of effort on your part. You may also see a negative charge show up in your monthly billing statement.

You don’t have to spend a negative balance immediately or all at once. You can simply maintain your normal spending habits until your balance is back to zero. According to the Truth in Lending Act, card issuers must refund any negative balance over $1 within a reasonable timeframe. However, manually requesting a refund through your online account or by calling the number on the back of your phone will speed up the process.

You can send a certified letter to request the return of your negative balance, but a phone call might do the trick as well. Therefore, it won’t improve your credit scores any more than a $0 balance might benefit you. That being said, the fact that your credit card balance is $0 might help your credit scores. If your credit reports show a $0 balance for every credit card, your credit utilization rate will be 0%. And 0% credit card utilization certainly could work in your favor.