Some people get nervous when they see a negative balance on their credit card statement or online account portal. One of the reasons a negative balance makes people worry is because they think it indicates a lower credit limit. If you are closing a credit card account with a negative balance, the issuer will most likely refund the money before officially closing the account. There are a handful of scenarios where it may not be that simple, however. For instance, you may find yourself with a negative balance as your account is about to officially close.
In this case, contact the card issuer by phone and ask for an inquiry into the account to process a refund. Credit cards may come with fees, from late payment penalties to charges for specific transaction types. Your credit card company may sometimes waive fees, like penalties for first-time negative balance on credit card offenses. If they decide to waive a fee you’ve already paid, they typically issue a statement credit to your account. If your balance is smaller than the refund, you may end up with a negative account balance.
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TPG senior credit cards editor Matt Moffitt recently had a negative balance of more than $400 on his Platinum Card® from American Express due to a refund. Instead of spending more on his Platinum Card, he used the American Express chat feature to ask an agent to transfer the negative balance and put it toward the Delta balance. The agent manually completed this action, and it took less than 48 hours for the balance to show up on the Delta 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. No, you do not owe any money if you have a negative balance on your credit card.
To avoid late payment fees, be sure to pay at least the minimum amount due out of pocket. Pay the full balance due and you’ll avoid interest charges, too. Just use your credit card like you normally do, and your credit card company will apply the account credit toward your purchases. For example, a negative balance could potentially affect your credit utilization—a measure of how much of your available credit you’re using. Experts recommend using no more than 30% of your available credit.
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- If you have a significant negative balance and don’t have a need to transfer it to another card, you may want to ask to receive the negative balance in cash.
- At first mention, negative balances give off a negative connotation.
- But you can ask your credit card company to send you those funds in the form of a refund.
- Purchases, cash advances and balance transfers add up to a monthly statement balance.
- In this case, your credit limit hasn’t changed, but you temporarily increased the amount you can charge on your card.
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Discovering a negative balance on your credit card statement or online account might make you feel worried or anxious. A negative credit card balance means that your card issuer owes you money. Another reason for a negative balance is if you earn a statement credit after you’ve paid your balance. Cash back rewards cards often offer cash back in the form of a statement credit. If the statement credit is larger than the amount of your balance when it’s issued, you will see a negative credit card balance. This could easily happen if you have autopay set up for a fixed amount on your credit card account.
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On the contrary, it could signal a low credit utilization ratio. If you’re concerned that the negative number may be inaccurate, contact your financial institutions customer service department for clarification. Otherwise, you can request a cash refund or just keep using your card like usual. In fact, a negative balance on your credit card account could simply mean that your card issuer owes you money.
However, a negative balance on your credit card is actually a good thing, because it means the bank owes you money instead of the other way around. The reason a negative card balance is mostly positive is that your negative balance probably means you overpaid for something at some point. That might mean paying for a purchase that requires a refund or paying off a balance before a statement credit is issued.
Here’s what to do if you have a negative balance on your credit cards
This is still your money, and you are entitled to receive a refund. A negative credit balance doesn’t affect your overall credit limit. But let’s say you have a $100 credit balance on your credit card, and your credit limit is $5,000. Usually, when you see your credit card statement, you’ll see a number like $250. This can happen for several reasons, but it indicates your account has a credit — which means that your credit card company owes you money.
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No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers. There are a few ways to get your money back when you have a negative credit balance. You can use this overpayment strategically if you plan to use more than your credit limit on a large purchase (or a group of purchases that add up). You are leaving Discover.com and entering a website operated by a third party.
It could also happen if you pay off purchases before you receive your credit card bill. For the most part, there’s nothing negative about a negative credit card balance. A negative balance doesn’t put your account into negative standing with your credit card company. It also won’t damage your credit scores or affect your credit limit. Negative credit card balances act as a kind of temporary credit on your account.
Refunded amounts will typically show as a negative charge (e.g. -$150) whereas regular purchases will show up as positive charges (e.g. $50). Once the issuer processes your request, the credit will be wired or sent via check (depending on the bank). You’ll typically receive your refund within 7 to 14 days, but if it’s been longer than 30 days, check back in with your card issuer. The easiest way to eliminate a credit balance is to spend money on your credit card.