What Is a Negative Balance on a Credit Card?

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Do you have a negative balance on your credit card?

Don’t panic! This is one of those times that a negative could be a good thing. A negative balance on your credit card statement means that the issuer actually owes you money.

There are a number of reasons that you could be showing a negative balance on a credit card, but most of them involve a statement credit in your favor.

In this article, Team Clark will walk you through some of the reasons you might have a negative balance on your card, and also help you understand your options for using it.

Table of Contents

What Is a Negative Balance on a Credit Card?

On a credit card statement, a negative balance means that the amount of money the bank or card issuer owes you exceeds the amount of the outstanding balance you have for charges you’ve made with the card.

For most people, this is an instance where a “negative” is actually a “positive” for your wallet.

The existence of a negative balance on your credit card statement is usually the result of a credit being applied back to your account after you’ve paid your most recent bill in full.

Let’s look at some of the more common explanations for why you might find your account in this status.

5 Common Reasons You Could Have a Negative Balance

If you have a negative balance on your credit card, it’s likely the result of one of these five instances.

1. Refund Issued

Did you buy something online only to decide to return it after it didn’t fit right or wasn’t as nice as advertised? Or did you prepay for a service that a business failed to deliver?


If you used your credit card for these transactions, you may find that the business issued a refund to your payment method.

And if you paid your credit card balance in full between the time you made the purchase and received a refund for the transaction, that could result in you having a negative balance on your credit card account.

2. Overpayment

If you’re like me, you may be meticulous about paying your credit card bills in full each month.

That strategy is likely to ensure that you never owe a penny of interest on your charges, but it does leave open the possibility of sending in more than you were required to pay.

Let’s say you sent in $902 to cover what you thought was your full bill, but an adjustment to one of your charges dropped the actual amount due to $895. That’d leave you with a “negative balance” of $7, which really just means you sent in a few more bucks than were necessary to cover things.

3. Credit Card Rewards

If you have a credit card with an active welcome bonus offer or cash back rewards program, you might have a negative balance on your account because your card issuer has given you the rewards as a statement credit.

For example, if you have a $300 welcome bonus for spending $3,000 within the first three months of having the card (or something similar), you might find that a $300 statement credit was issued to your account in the fourth or five month after successfully hitting the spend requirement.

Likewise, a card issuer may distribute your cash back rewards earned on spending with the card via incremental statement credits. Some cards will do that after you’ve earned $25 worth of cash back rewards.

4. Fraudulent Charges Refunded

If you recently had your credit card information compromised in a data breach or had the card stolen, there’s a chance that some charges you didn’t actually make could trickle in to your account.

In most cases, you should be able to dispute these charges before having to pay for them.


But there is a chance you could find yourself receiving refunds in the form of statement credits if you paid a bill on a charge that was later deemed to be fraudulent.

5. Fees Canceled or Refunded

Did you dispute a late fee or were you recently charged an annual fee, balance transfer fee, cash advance fee or otherwise?

While most of the time these charges are valid and not eligible for refunds, you may find that you received a statement credit that sent your balance “negative” if the card issuer found that it charged you one of these fees in error.

This explanation is unusual, so you may want to verify with your card issuer that your negative balance is correct before assuming the credit on your account is really yours to claim.

What To Do if You Have a Negative Credit Card Balance

If you find yourself with a negative credit card balance, there are a few options for your next steps.

1. Contact Customer Service With Questions

If you’re unsure if the balance on your credit card statement is correct, the safest thing to do next is contact your issuer’s customer service to make sure you’re on the same page.

This will give you the confidence that the credit showing on your account is valid and you next can make plans for spending or retrieving the money.

If you find out that the credit is in error, you will have saved yourself the headache of potentially owing more money than you expected on your next credit card bill.

2. Just Keep Spending With the Card

If you’re comfortable that the negative balance on your statement is correct, you don’t actually have to do anything other than keep using the card like you normally do.

The card issuer will use the credit showing on your account to offset future charges.


For example, if you had a $100 negative balance and proceeded to spend $150 with the card in the next billing cycle, you’d receive a bill reflecting that you owed only $50.

3. Explore Options for Getting Money Sent to You

While most people will be fine with the path laid out in No. 2 above, there are a few instances in which that may not work.

If you don’t use the card often or are considering closing the account, you may not want a large sum of money sitting as a negative balance on the card. That’s understandable.

You can request that the money be sent to you. The card issuer may be able to send it directly to the bank account you have associated with the card for purposes of making payments, or you could request a refund via check.

3 Common Questions About Negative Credit Card Balances

While a negative credit card balance is actually a pretty straightforward situation to resolve, there are still some understandable questions consumers have about the process.

Let’s answer a few of them.

Can This Negatively Impact Your Credit Score?

The presence of a negative balance on your credit card should not negatively impact your credit score. And actually, there’s a chance that it may help your score.

Credit utilization can account for up to 30% of your credit score. Having a negative balance on your account lowers your utilization of available credit on that line of credit.

Does This Mean Your Credit Limit Is Higher?

A negative balance on your credit card does not impact the credit limit of your card. However, it may give you temporary increase in spending power with that card.

For example, if you have a $10,000 credit limit and a $500 negative balance on your credit card, your spending power is actually $10,500 thanks to the $500 the card issuer owes you. But you still cannot run up a balance that results in you owing more than $10,000.


What Happens if I Close a Credit Card With a Negative Balance?

This means that the card issuer will owe you money upon the closure of the account. So you’ll want to be in communication with the issuer to ensure you get your money back and that you get it transferred to you in the way you want it. The most common ways are via bank transfer or check.

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