– What is a Negative Balance on Your Credit Card –
What is a 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 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 the 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.
We hope this article was useful and educative, do well to share these messages with friends and loved ones. If you have a question, kindly drop your comments below.