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What Does a Negative Balance on a Credit Card Mean?

The content is accurate at the time of publication and is subject to change.

It is possible to have a negative balance on a credit card, which has probably happened to you once already. A few conditions might cause a negative credit card balance, but don't worry. It just means that your credit card company owes you money, and not vice versa.

Here you will know how a negative credit card balance happens, how it affects your credit scores and what can you do about a negative balance.

What is a negative balance on a credit card?

A negative balance is when your balance is below zero, which means you will see a minus symbol in front of a dollar amount (e.g. -$100) in your credit card statement. It basically means that your credit card issuer owes you money.

Typically, this happens when you pay more than you owe, if you have some returns, or other credits to your account. The extra credit is not bad for your account. If you continue using your credit card, future purchases will be added to any negative balance.

How can you get a negative balance on a credit card?

A negative credit card balance is not a common situation, but it may happen from time to time, especially if you have a habit of paying off the card balance in full each month.

Here are some reasons a negative credit balance can happen:

- You overpaid your credit card bill: If you accidentally pay your credit card company more than your current balance, you'll end up with a negative balance. It is also possible to overpay when you use an autopay feature to pay your bill.

- You got a refund for returned purchases: If you pay off your card balance before you get a refund or if the refund is more than your current balance, the refund will result in a negative balance.

- You redeemed rewards for a statement credit: If you have a rewards credit card and redeem rewards for a statement credit, you could get a credit that exceeds your current balance. That is especially true when you have a habit of paying off the card balance in full each month.

- You have waived or canceled fees: If you've paid your credit card annual fee or late fees and the issuer waived them, it can result in a negative balance.

- You have a fraudulent/disputed charge removed: If you pay off your card balance and a fraudulent or disputed charge is credited to your account by your credit card issuer, it could lead to a negative balance.

What can you do about a negative balance on a credit card?

You don't really have to do anything, but there are some options. If you want to use a negative balance, here is what you can do:

- Request a deposit: contact your credit card issuer to see if you can request a refund. Your issuer may deposit the negative balance amount to your bank account, send you a check, money order, or cash. The refund is usually sent within seven business days of getting your request.

Even if you do not request a refund, your credit card issuer must try to issue a refund if you do not make any other purchases with your card for more than six months.

- Make a purchase: you can simply spend the negative balance. Just continue making purchases using your credit card like you normally do, and new purchases will first apply to your negative balance until you won't have it.

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How can a negative balance impact your credit score?

Typically, negative balances don't affect credit. Most credit models see negative balances as a $0 balance. This means a negative balance won't hurt your credit scores. In fact, a negative balance could actually have a positive impact on your credit scores.

For example, a negative balance could potentially be good for your credit utilization (the percentage of your available credit you are using). It's recommended to keep your credit utilization below 30%, overall and on each individual revolving credit account. And since you have a negative balance, your credit utilization could be less than 30% - which is good for your credit scores.

Bottom line

Don't worry if you have a negative balance. It may happen from time to time. It doesn't hurt you, but if you feel uncomfortable, you have options. Remember, it's your money. Don't hesitate to request a refund, or just continue using your credit card as you normally do.

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Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions. All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.

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