What Does a Negative Balance Mean on My Credit Card?

A credit card balance usually indicates the amount of money owed to the card issuer. However, a “negative balance” means the card issuer actually owes money to the cardholder. This article clarifies what a negative balance signifies and the steps to take when it appears on a credit card account.

Understanding a Negative Balance

A negative balance on a credit card statement shows that the credit card company has a credit with you, rather than you having a debt with them. It means your account balance is below zero. This credit balance indicates that the card issuer owes you money, effectively acting as a credit that can be used for future transactions or returned to you. This amount typically appears on your statement with a minus sign (e.g., -$50) or enclosed in parentheses, clearly distinguishing it from a standard positive balance.

Common Causes of a Negative Balance

A negative balance on a credit card can arise from several common situations, often involving credits applied to an account that either had a zero balance or was overpaid. One frequent cause is an overpayment, where a cardholder pays more than the total outstanding balance due. This can happen accidentally, such as entering an extra digit or making multiple payments, or sometimes intentionally.

Refunds for returned purchases are another common reason for a negative balance. If you return an item bought with your credit card after you have already paid off the original purchase amount, the refund credited back to your account will result in a negative balance. Similarly, statement credits, such as those from rewards redemptions or promotional offers, can also lead to a negative balance if the credit amount exceeds the current outstanding balance. Other causes can include waived fees or the reversal of a fraudulent or disputed charge after the balance has been paid.

Actions to Take with a Negative Balance

When a negative balance appears on your credit card, several options are available to manage the credit. The most straightforward approach is to simply continue using your credit card for new purchases. The negative balance will automatically offset future charges until the credit is fully utilized, effectively bringing your balance back to zero or a positive amount. This method requires no direct action beyond normal card usage.

Alternatively, you can request a refund of the negative balance from your credit card issuer. This process typically involves contacting customer service, either by phone, online, or in writing. Credit card companies are generally required to refund any negative balance over $1 upon request. The refund may be issued as a check mailed to your address, a direct deposit to a linked bank account, or sometimes as a money order or cash.

For written requests, credit card issuers are typically required to send the refund within seven business days of receiving the request. While the actual processing time for a refund can vary, often taking between five to fourteen business days for the funds to appear in your account, some refunds may take longer depending on the merchant and the card issuer. If you do not use the negative balance or request a refund, some card issuers may automatically issue a refund check after a certain period, such as six months, provided the overpayment is more than $1.