Negative Balance On A Credit Card: What To Do? (2024)

When is a negative a positive? When it comes to a credit card balance, it is. A few conditions might cause a negative credit card balance, but it’s not a bad position to be in. Any time a negative dollar amount shows up on a credit card balance, it means the bank owes the account holder money. The negative balance will zero out or become a positive balance as the cardholder charges additional purchases.

What Is a Negative Balance on a Credit Card?

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).

Any future purchases made will be added to any negative balance.

How Can You Get a Negative Balance on Your Credit Card?

You Overpaid Your Credit Card Bill

Cardholders can overpay a monthly bill. This happens by mistake when a cardholder manually enters an amount total to more than the current balance when paying online.

If an autopay feature pays your bill off before a manual payment is processed a negative balance can also result. Paper check payments plus any type of online payment made in the same billing cycle could also result in a negative balance.

You Returned Something You Bought With the Credit Card

Returning a purchased item for a refund will usually result in the vendor refunding the charge to the applicable credit card. If the cardholder has already paid off any of the card’s balance, the refunded amount may cause a negative balance on the next statement.

You may also see a negative charge show up in your monthly billing statement. Refunded amounts will typically show as a negative charge (e.g. -$150) whereas regular purchases will show up as positive charges (e.g. $50). All charges add to sum the monthly balance.

You Cashed Out Too Many Rewards

Some credit cards provide cardholders with bonus rewards or statement credits based on select purchases. If the cardholder pays off the balance each month, a reward or statement credit applied later may show up as a negative balance on a later statement.

Negative Credit Card Balance: Main Points

Having a negative balance on a credit card isn’t a bad thing, but it has some points to consider:

• Negative balances don’t affect credit. Most credit models typically consider negative balances equivalent to a $0 balance. This means a negative balance won’t hurt a credit score.
• Negative balances won’t improve a credit score, either. Frequent card users will likely zero a negative balance within a short period of time, meaning there may not be a long-term effect on their credit utilization rate (which can heavily impact a credit score).
• A negative balance means a cardholder is usually in good standing. Paying off your balance every month will ensure that you keep your credit utilization rate low, make on-time payments, and maintain or improve a healthy credit score. Finding a credit account with a negative balance likely means you’re on top of your bills and keeping up with financial decisions.
• Having a negative balance can make closing a credit account more cumbersome. While it’s not the worst consequence to deal with, closing a credit account with a negative balance means there are a few more steps involved to get your money back and close the account for good.

How To Get Your Money Back From a Negative Balance

It’s in a cardholder’s best interest to use any negative balance on a credit card statement. It may not be the same as cash in hand, but it does have value. Once the negative balance has been used up, the cardholder may continue to make purchases or close the account if desired.

Leave the Balance Alone and Decide Later

A negative balance will usually sit in an account for at least 60 to 90 days before the bank may decide to refund the money via check or cash deposit into a linked account. Because the card issuer owes the cardholder, there won’t be a monthly payment required or danger of accruing interest. The cardholder can use the time to figure out whether they want to continue using the card to make purchases or close the account and request the money back as a refund. Card issuers will likely not pay you interest if you have a negative balance.

Use Your Credit Card for Additional Purchases

The easiest way to bring a negative balance to $0 is to continue making purchases using the credit card. Even if the balance turns into a positive $50 from -$300, the cardholder can make another payment to pay off the positive balance.

Get Your Money Back as a Credit Balance Refund

If a large negative balance exists—say, $1,000 or more—the cardholder can request a refund from the credit card company via check or direct deposit. Though it often makes more sense for larger balances, having a larger negative balance is not required to request a refund.

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.

What Do You Do With a Negative Balance on a Closed Credit Card Account?

If you have a negative balance while closing a credit card account, it’s likely that the card issuer will settle that by refunding the money before officially closing the account. However, you may find yourself with a negative balance if you get one last refund right before the account is officially closed. Once that happens, your online account access may be cut off. In this case, contact the card issuer by phone and ask for an inquiry into the account to process a refund. Ideally, do this within 30 to 60 days of the account closing.

Remember: It’s Your Money

Negative balances reflect what the card issuer owes you, the cardholder. Don’t hesitate to request a credit to your checking account. While card issuers are required to respond to a request for a refund over $1 according to the Truth in Lending Act, it’s up to you to make the request within a reasonable timeframe.

Bottom Line

Negative balances sound, well, negative. 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. Use up a negative balance by making purchases with the card or by requesting a refund from the card issuer.

Frequently Asked Questions