What Does a Negative Balance on a Credit Card Mean?

f you’ve logged on to your credit card account and been surprised by a negative balance on your card, you might be wondering what it means. The good news is that you have nothing to worry about — a negative balance means the credit card company owes YOU money. What a nice change, right?

We’ll answer all your questions about negative credit card balances, including how to get your money returned, how a negative balance affects your credit score and limit, and more.

Reasons You Have a Negative Balance

Usually, when you see your credit card statement, you’ll see a number like $250. But when you see a -$250, you might be confused. This can happen for several reasons, but it indicates your account has a credit — which means that your credit card company owes you money.

There are a few reasons why you might have a negative statement balance.  These include:

You Overpaid Your Credit Card

Let’s say your card’s balance was $100, but you sent a check for $125. This would lead to a negative credit balance of $25 on your credit card.

Hot Tip: This typically only happens if you pay by check.  Online payment options usually limit payments to the total amount due.

You Returned Something You Bought on Your Credit Card

If you’ve already paid off your bill and then end up canceling something (like a prepaid hotel stay), it will be credited to you by the merchant and returned to your account. This will show up as a negative balance.

Rewards or Statement Credits Were Applied

If you’ve used a credit card statement credit and had a zero balance on your card, the value of your statement credit will show up as a negative balance. Similarly, if you get cash-back rewards in the form of statement credits, you would see this show up as a negative balance on your credit card.

You Get a Chargeback for Fraudulent Purchases

You may have paid off your credit card and discovered some unauthorized charges. In this case, the fraudulent charges would be returned to your account and show up as a negative balance.

Your Credit Card Fees Were Waived

Maybe you have free ATM fees when you use out-of-network ATMs, and the charged fees were returned to you. Or maybe you could negotiate with your card issuer to get reimbursed for your card’s annual fee. These (or the credit of any other fees) could result in a negative balance on your credit card.

Bottom Line: If you keep a running balance on your card or don’t pay off your card in full, you are unlikely to have a negative balance on your credit card. This is because any credits will simply reduce the total amount of your bill rather than creating a negative balance.

Does a Negative Credit Balance Affect Your Credit Score?

Even though you may see a negative balance on your credit card account, this won’t be reflected in your credit reports. When you check your credit report with the top 3 credit bureaus, the balance will simply show $0. Since credit scoring methods, such as FICO, only use the information found on your credit report, your negative credit balance won’t necessarily help you.

That said, not having a balance helps your credit utilization, which accounts for 30% of your overall FICO credit score. Having 0% utilization on any card is a great thing for your credit score!

Bottom Line: A negative credit balance has the same benefit as having a $0 balance on your credit card.

Benefits of Having a Negative Balance

There are some unexpected benefits from having a negative balance, specifically regarding your credit limit, cash advances, and interest.

Credit Limit

A negative credit balance doesn’t affect your overall credit limit. But let’s say you have a $100 credit balance on your credit card, and your credit limit is $5,000. You are allowed to spend up to $5,100 on your card.

In this case, your credit limit hasn’t changed, but you temporarily increased the amount you can charge on your card.

You can use this overpayment strategically if you plan to use more than your credit limit on a large purchase (or a group of purchases that add up). This is especially valuable if you have a low credit limit.

Cash Advances

If you overpay your card and take out a cash advance, you aren’t borrowing money since the bank owes you that money. In this case, you won’t be charged any fees for the cash advance you take out using your negative balance.

If you plan ahead, you can avoid costly cash advance fees!

Interest Fees

You don’t pay interest on a negative credit balance because you aren’t borrowing money. In fact, the bank owes you money. This isn’t a good reason to intentionally have a negative balance, but it doesn’t hurt!

Hot Tip: Unfortunately, the bank won’t pay you interest for a credit balance!

Getting Money Back When You Have a Negative Credit Balance

There are a few ways to get your money back when you have a negative credit balance.

Use Your Credit Card

The easiest way to eliminate a credit balance is to spend money on your credit card. The credit balance will offset your spending, and you can use up your credit. For example, if you have a $75 credit balance and you use your credit card to go grocery shopping and spend $100, your new credit card balance will reflect the net balance of $25.

Request Money Back From Your Credit Card Issuer

Maybe you don’t want to use this credit card anymore or plan to close your account. In this case, you can request back money from your credit card’s issuer. You can typically do this via secured message, calling your card’s customer service line, or even heading into a branch.

If you have a checking or savings account with the bank, they may be able to wire the money to you directly. Otherwise, they may send a check to your address on file.

Hot Tip: Be sure your address is up to date in your online profile so that you can get the money ASAP.

Do Nothing

You can always wait until your credit card issuer sends a check. Per Regulation Z (also known as the Truth-in-Lending Act), this must be done within 6 months. This means the longest you can have a negative statement balance on your credit card is 6 months before it is returned to you. Again, you’ll want to ensure your address on file with the issuer is correct.

Bottom Line: Ultimately, this is your money, so you want it to work for you. Whether it is earning you interest or offsetting future spending, it’s best to use up or get a refund of your credit balance ASAP.

Implications of a Negative Balance on a Closed Credit Card

Delayed credits can happen for many reasons. Most commonly, a store has an extended return window but may only allow returns to be processed to the original form of payment. If you’ve closed your credit card account and later received a credit, there is no need to worry. This is still your money, and you are entitled to receive a refund.

Hot Tip: If you are trying to avoid a return being made on a closed card, request that the return be given to you in cash or store credit.

If you have other accounts with the card issuer, you will still have access to your online account and can request a refund through your online portal. If not, you must call the number on the back of your credit card or visit a local branch.

If you don’t have your card anymore, you can always start with a general customer service number or check out our guides to Chase and American Express card customer service numbers.

Once the issuer processes your request, the credit will be wired or sent via check (depending on the bank). You’ll typically receive your refund within 7 to 14 days, but if it’s been longer than 30 days, check back in with your card issuer.

Hot Tip: A closed credit card doesn’t mean a card that was reissued under a different credit card number. In the case of fraud, card issuers will reissue a card with new numbers, but your old card will still be linked to your account. Your card issuer should automatically apply your credit to your current account.

Final Thoughts

A negative balance can be positive! It is money owed to you for various reasons and can help offset future spending on your credit card. It’s normally pretty painless to use up a negative balance — unless you are dealing with a closed account. Even though it might take a few more steps to get it, negative balances are still money owed to you.