What is Negative Balance on Your Credit Card and How Does It Affect You?
What is Negative Balance on Your Credit Card: You might be alarmed if you log in to your credit card account portal and see a negative balance. How did they do this? In this article, we’ll answer any questions you might have about your credit card account having a negative balance.
What is a Negative Balance on your Credit Card?
Having a negative balance on your credit card account does not necessarily imply that your accessible credit is reduced or that you have done something illegal. Indeed, a negative balance on your credit card account might also simply mean your card issuer owes you money.
Basically, you are in a situation where you have paid more than you owe on your credit card. If this happens, your card balance will be seen expressed as a negative number.
Reasons why you may have a negative balance on your credit card
You can have a negative balance (also known as a credit balance) on your credit card account for a number of reasons. Here are the most common:
You returned purchase and got a refund: If you return a purchase or dispute a charge that you already paid for, you may receive a refund from the merchant or your card issuer that negates your balance.
You paid extra: If you manually enter a payment amount and accidentally pay over the amount due. Or if you have autopay set up but make a manual payment around the time it withdraws, you may wind up paying twice.
You earned a statement credit: Some credit cards provide welcome bonuses or annual credits that post to your account after you make eligible charges. You may also be able to redeem credit card rewards for a statement credit. There’s a chance these credits can post after you’ve paid your bill.
How Will My Balance Appear on My Statement?
If you owe money to the credit card company, the balance will be a positive number.
If you do not owe any money or paid the exact amount owed your balance will be zero.
Also, if you overpaid your bill or were issued a credit after you already paid your bill, your account statement will show a negative balance. A negative balance is indicated by a negative number or a number with parenthesis around it.
What should you do about a negative balance?
If you notice that you have a negative balance on your account, there is no need to panic. You don’t have to do anything, but here are some possible actions to take:
Call your issuer
If you have any doubts about why you have a negative balance, call your issuer. The card issuer should be able to give you a clear explanation of what caused the negative balance. Most card issuers have a specific way of handling negative balances, so a call can give you some clarification.
Request a deposit
When you have a negative balance, you can request that the amount of that balance be deposited into your bank account. You can do this because a negative balance is similar to a statement credit.
Make a purchase
If you have a negative account balance, you don’t have to actually do anything. You can make purchases on your credit card as you normally would. Just keep in mind that you have a sort of short term credit for whatever the negative balance amount happens to be.
For example, if you have a negative balance of $100, you won’t add to your new balance until you’ve spent more than $100. 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.
Does a negative balance affect your credit score and credit limit?
While a negative balance may seem like a bad thing for your credit score, it’s actually a neutral situation. Negative balances don’t really help or hurt your credit score. That’s because credit scoring models consider negative balances as if you have a $0 balance.
While a negative balance won’t change your credit score, it can temporarily impact how much you can spend on your card — but it ultimately doesn’t raise your credit limit.