What does a negative credit card balance mean?

You’re probably used to owing money to your credit card company. From time to time, however, it can be the other way around. 

If your credit card account shows a negative balance, that means your creditor owes you money. While it might be startling to see a negative balance on your account, it shouldn’t have much impact on you. Most likely the money will be credited toward your future purchases.

What is a negative credit card balance?

A negative credit card balance is a balance below zero. When your balance is negative on a credit card, it means you’ve paid more than you currently owe. As a result, the creditor owes you money back. 

For example, let’s say you use a credit card to buy a set of headphones for $150. Then, after paying off your credit card balance you discover the headphones are defective, so you return them and get a $150 refund to your card. As a result, you might have a balance on your credit card of -$150.

In most cases, the negative balance will be credited toward your next transaction(s) until the full amount is spent.

How do I know if I have a negative credit card balance?

You can find your current credit card balance by logging into your card account online. If you see a “-” sign in front of the balance amount, you have a negative balance.

You can also review your account balance by looking at your monthly credit card statement, however the statement may show your balance at the end of your last billing cycle and not the most up-to-date balance on the account. 

Reasons why you might have a negative credit card balance

You can end up with a negative credit card balance for several reasons, including:

• You paid more than your outstanding credit card balance. 
• You paid for a purchase and later received a refund for the transaction. 
• You received a credit card chargeback or had a fraudulent charge reversed.
• You earned a statement credit by using a rewards credit card.

What happens if my credit card balance is negative?

If you discover a negative balance on your credit card, you don’t have to take any action. The negative amount should automatically be credited toward your future purchases on the card. 

But if you would like to receive a refund sooner, you can request a refund from the issuer by logging into your account, contacting the issuer by phone or visiting one of their physical bank branches.

If you don’t request the funds or make purchases with the account the issuer will eventually issue you a check for the credit balance amount. This typically happens if you’ve had a negative balance for 90 days. 

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Does a negative credit card balance affect my credit score and credit limit?

There are ways to increase your credit card limit, but having a negative credit card balance is not one of them. If you want to raise your limit, you may need to submit a request to your creditor.

Having a negative balance doesn’t have a negative impact on your credit scores, but it will benefit you to not owe anything on your statement. That’s because having a low or no balance reduces your credit utilization ratio, or the amount you owe in comparison to your card limit. This ratio makes up 30% of your FICO credit scores, and the lower your ratio the better. But having a negative balance isn’t any better than having no balance at all.

What to do with a negative balance on a credit card?

If you have a negative balance on your credit card, there are a couple of ways you can recover the balance: 

• Use the card: Spend down the negative balance by using your credit card for future purchases. 
• Ask for a refund: If you don’t intend to use the card in the near future, request a refund from the creditor. The balance may be refunded as a direct deposit to your bank account, a check or a credit to one of your cards from the same issuer.
• Wait: If you don’t use the card or request a refund the bank will eventually send you a check. 

How long will a negative balance remain on my account?

The amount of time a negative balance remains on your credit card account depends on a few things. If you spend money on the card, the negative balance will automatically be credited toward your purchases. 

If you don’t make any purchases on the card within six months, the creditor has to issue you a refund. Alternatively, you can submit a request in writing and the creditor has to give you a refund within seven business days.

What do you do with a negative balance on a closed credit card account?

If your credit card account is closed with a negative balance, the creditor has to make an attempt to refund you after six months. They may do this by paying you cash, sending you a check or money order or making a deposit to one of your active accounts.