Why My Credit Card Balance Is Negative
Understand why your credit card might show you a credit instead of a debt, and learn how to navigate this unique financial situation.
A credit card balance typically represents the amount you owe your credit card issuer. However, cardholders sometimes encounter a negative credit card balance, which means the credit card company owes you money. This indicates a credit in your favor.
What a Negative Balance Is
A negative credit card balance means your account has a credit, indicating the credit card company owes you money. This amount appears with a minus sign on your statement or online account, such as “-$50”. Unlike a negative bank account balance, which indicates you owe the bank, a negative credit card balance means funds are available to you. It functions like a temporary credit for future purchases or can be refunded.
Reasons for a Negative Balance
Several common scenarios can lead to a negative balance. One frequent cause is overpayment, occurring when a payment exceeds the total outstanding balance. This might happen if you accidentally pay a bill twice, input an incorrect amount, or make a payment just before a credit is applied. For instance, if your balance is $100 and you pay $150, your account will show a -$50 balance.
Receiving a refund for a returned item is another common reason. If a refund is processed after you have already paid off your balance, or if the refund amount is greater than your current balance, a negative balance will result. For example, returning a $75 item to a card with a zero balance will result in a -$75 balance. A refund from a merchant or service provider can also lead to this credit.
Promotional credits or rewards can also create a negative balance. Many credit cards offer cash-back rewards or statement credits as part of their benefits. If these credits are applied to your account when you have a low or zero outstanding balance, they can push your account into a negative state. Less frequently, a negative balance might arise from billing errors corrected in your favor or credits issued following an investigation into a fraudulent charge. If your credit card issuer waives a fee you have already paid, this can also result in a credit.
Managing a Negative Balance
When you discover a negative balance, verify the amount and understand its origin by reviewing your recent transactions and statements. This helps confirm the cause, whether it is an overpayment, a refund, or a promotional credit. You generally have a few options for managing this credit.
One simple approach is to leave the credit on your account, allowing it to be applied automatically to your future purchases. As you make new charges, the negative balance will decrease until it reaches zero or becomes a positive balance again. Alternatively, you can request a refund of the negative balance from your credit card issuer. This typically involves contacting their customer service and can result in a check being mailed to you or a direct deposit to your bank account, often within a few business days.
A negative credit card balance does not negatively impact your credit score. Credit scoring models generally view a negative balance as equivalent to a zero balance, reflecting positive account management. This credit balance does not earn interest for you. While it represents money owed to you, it does not function as an interest-bearing deposit.