Positive Balance on a Credit Card: What to Do
Your credit card has a positive balance? Understand what it means when your card issuer owes you money and the best ways to manage these funds.
A positive balance on a credit card occurs when the credit card company owes you money. This means your account holds a credit in your favor, effectively acting like a prepaid amount.
What a Positive Credit Card Balance Means
A positive credit card balance signifies that your account has a credit, indicating the card issuer holds funds that belong to you. This contrasts with a typical balance where you owe money for purchases or cash advances. On a credit card statement, this credit often appears as a negative number in the “current balance” or “amount due” column, or it might be explicitly labeled as a “credit balance” or “negative balance.” It represents an overpayment or a refund, turning your liability into an asset. The credit can be used against future transactions.
Common Causes of a Positive Balance
A positive balance can result from several common scenarios. One frequent cause is an overpayment, which happens when a payment exceeds the total outstanding balance. This can occur accidentally, such as making a payment for a full statement balance shortly before a credit is applied, or if multiple payments are inadvertently made.
Another common reason is the processing of returns or refunds. When an item purchased with the credit card is returned to a merchant, and the merchant issues a credit back to the card, it can result in a positive balance if the original purchase had already been paid off. Similarly, rewards or cash back accumulated through the card’s program might be applied as a statement credit, which can push the account into a positive balance. Promotional credits, such as sign-up bonuses, goodwill gestures, or corrections for billing errors, can also lead to a credit on the account.
How to Handle a Positive Balance
Cardholders have several options for managing a positive balance. One straightforward approach is to simply leave the credit on the account, allowing it to offset future purchases. Any new charges made on the card will draw from this positive balance until it is depleted, effectively reducing the amount owed on subsequent statements. This method is often recommended for smaller credit amounts as it requires no action.
Alternatively, cardholders can request a refund of the positive balance from the credit card issuer. This process typically involves contacting the card company’s customer service department. Refund methods vary by issuer but commonly include a check mailed to the cardholder’s address or a direct deposit to a linked bank account. It is advisable to confirm the specific process and expected timeline for receiving the funds with the issuer, as some companies may automatically issue a refund check if a credit balance persists for a certain number of billing cycles or exceeds a minimal amount.
Key Considerations for a Positive Balance
A positive balance generally has no impact on your credit score. Credit scoring models, such as FICO and VantageScore, primarily evaluate payment history and credit utilization, neither of which is affected by a credit balance in your favor. This means holding a positive balance does not improve your credit standing, nor does it harm it.
No interest is accrued or charged on a positive balance, as the funds are owed to the cardholder. Always verify the amount of the positive balance against your own records, such as refund receipts or payment confirmations. Should any discrepancy be found, promptly contacting the card issuer is advisable to resolve the issue.
For older, unclaimed positive balances, they may eventually be turned over to state unclaimed property divisions. These divisions manage funds and property that have been dormant or uncontacted by their owners for a statutory period, which can range from one to five years depending on state law. Card issuers are typically required to attempt to contact the owner before escheating the funds to the state. If a positive balance remains unaddressed for an extended period, it might be listed as unclaimed property, which can then be searched for and claimed through state unclaimed property websites.