Negative Balance on Credit Card

By: Sr vini

Negative is a good thing in the case of a credit card! If you have opened your credit card statement, and you’re surprised by seeing a negative balance on your credit card, then it is a good thing. Your bank or credit card company owes you money. There can be many reasons behind the negative balance on credit card. 

So let’s get to know about the negative balance on credit in detail & get answers to all the queries related to it. 

What does a negative balance on credit card mean?

Credit card statement balances reflect the amount owed to a credit card company by a cardholder. It includes all the purchases, cash advances, and balance transfers. The credit card statement is mostly positive or zero if you pay back the balance in time.

If you have a negative balance on credit card, then it means that the bank or credit card company owes you money. A minus sign (e.g., $500) appears in front of the dollar number to indicate this additional credit.

Example to Understand Negative Balance on Credit Card:

You bought a dress for $100; now, when your credit card statement comes, it comes with +$100. SO you have to pay this amount. 

But after 15 days, you return the dress, and then your credit statement comes, with -$100, as you have already paid the credit card bill. But the returned dress amount is now added to your credit card balance, which the bank owes you. 

Reasons behind the negative balance on credit card:

Don’t consider yourself lucky to have a negative balance on your credit card. It is probably, your money coming back to you. There can be various reasons why you have a negative balance on your credit card! Here are those:

1) Overpayment of Credit Card Bill

On your credit card statement, you may have paid more than you owed. Overpaying a credit card bill is possible. This happens when a person manually enters an amount that is more than the balance on their card when they pay online.

So check if you have paid more than the credit card bill.

2) Returning something purchased through credit card

When you used a credit card to buy something but soon found out that the item you bought wasn’t what you needed or was broken, you had to return it. The amount you return will go on your credit card and make your credit card balance negative.

So check if you have returned something that you purchased through a credit card.

3) Bonus Rewards

When you make qualified purchases on your credit card, you may be eligible for a sign-up bonus or an annual credit. A reward or statement credit can appear as a negative balance if the cardholder pays the bill in full each month.

4) Fee Refunds

You may be eligible for a credit card company to reimburse you for costs such as a late fee, interest penalty, or an annual percentage rate (APR). If a card issuer makes a mistake, it may have to reimburse fees or interest. Your new negative balance is correct, no matter what the situation may be.

How does a negative balance on a credit card work?

A negative balance on credit card happens when your credit card gets the extra amount that you have to pay. To understand it easily, let’s see an example:

Let’s say that you bought $100 shoes using a credit card. After a few days, you paid back the credit card. But then you returned the shoes due to any reason. Now, the seller paid back the $100 to your primary payment method, i.e., credit card.

The $100 was credited to your credit card that had no money to pay back. So the additional amount comes as -$100. 

Is it bad to have a negative balance on a credit card?

No, it is not negative to have a negative balance on the credit card. However, it is totally okay to have a negative balance on the credit card because it is your money. Here are the things you should know about negative credit card bills:

  • A negative balance will not hurt your credit score: In most credit models, a negative balance is treated as if it were a zero. This means that a negative balance on a credit card will have no effect on your credit score.
  • It means the cardholder is in good standing: You have a credit card with a negative balance, which suggests that your finances are in order and that you are making sound financial decisions.
  • Closing credit cards with negative balances can be tricky: Negative credit balances necessitate additional measures in order to terminate the account and get your money back.

How to get rid of negative balance on credit card?

Why get rid of negative balance on the credit card when it’s your money, and you can use it. Here are some ways by which you can use or get rid of a negative balance on the credit card:

1) Request a credit balance refund

Refunds can be expedited by contacting the credit card provider by dialing their customer care phone number on the back of the card. Refunds can be received in a variety of ways, including a cheque or even a direct deposit into your bank account, depending on your credit card company.

2) Use the Extra Credit

It’s better to utilize your credit card for future purchases than to wait for a cheque in the mail to clear your account. For example, suppose you have a negative balance of $100 on your credit card, and you want to get it back to zero by purchasing $100 worth of goods at the store.

3) Just Wait

As long as your credit card issuer takes care of a negative amount, you won’t have to worry about it. However, it is necessary by law that your credit card company make a good faith effort to repay the money to you if the negative balance remains on your account for six months, even if you do not request a refund.

How long does a negative credit card balance last?

The negative credit card balance lasts for usually for six months if you do not use your credit card. In most cases, your credit card company must try to return the money if you have a negative balance for six months. Even if you don’t ask for it, your credit card company is legally required to try to do this.

With so many ways to get the money, it’s best to only use this option in very rare situations, like when you’re out of the country for a long time.

Read Also: Accidentally Put Wrong Income on Credit Card Application

What happens to negative credit card balance on a closing credit card?

In most cases, when you close a credit card account, the card company will refund the money you owe before the account is closed. The only way to avoid this is to get one last refund right before the account is closed.

If you receive a refund after the account is canceled, you may find yourself in the unfortunate position of having a negative balance.

If this is the case, call the credit card company and request an account check to begin the refund process. Do this as soon as possible after your account is closed.

Can negative balance on credit card affect credit score?

A negative balance lowers your credit utilization ratio, which is your account balance minus your credit limit. Because this lowers your credit utilization ratio, it makes sense to think that it will improve your credit score. But this is not the case.

Credit agencies do not report the negative balance, and they see the balance as zero.

So neither will it negatively impact credit score nor will it increase the credit score. 

Can I transfer negative balance from credit card Bank of America?

Yes, if you have a negative balance on credit card, then you can ask for a transfer to a bank account. You have to contact the customer support of the Bank of America. Cardholders can request a return of their Bank of America credit balance by phone (1-800-732-9194) or by writing to

Bank of America

PO Box 982234

El Paso, TX 79998-2234

In addition, Bank of America cardholders can receive a check for their credit balance return.

What happens if you overpay credit card American express?

If you overpay the American express credit card bill, then it will create a negative balance. For example, you have a bill of $1500, and you accidentally paid $1600. Then the $100 will be shown as -$100 in credit card. 

The amount will be settled in your next purchase through a card or in the next bill. You can even ask for a refund in your bank account if you want to. 

The negative balance is totally fine & it’s your money. 

Quick Link: How Long Does It Take for a Credit Card Payment to Process

Bottom Line

This was all about Negative Balance on credit card. Now you can relax after seeing a negative credit card balance, as it’s your money. We hope you found this article helpful & informative. 

Let us know your thoughts & suggestions in the comments below!

Thank you for reading!