Stressing Over a Negative Credit Card Balance? Here’s What to Do
Have you ever had anxiety about checking your credit card app and seeing your balance in the negative?
If so, you’re not alone and it’s not the end of the world. Having a negative balance is more common than you think.
Let’s clarify the differences between a positive and negative credit card balance.
A positive balance means the total money you owe back to the credit card company. Sometimes that’s not always the case. Having a negative balance means that’s the money the credit card company owes back to you. There’s no need to pay the total amount back. In layman’s terms, you found extra money you forgot you had in your pockets.
Now you know the differences between the two balances, we’ll over how people get a negative balance. Most of the causes aren’t bad, they’re helpful to know so you’re not stressing out over your finances.
Key Takeaways:
- What Causes a Negative Balance on Your Credit Card?
- Does Your Negative Balance Affect Your Credit Score?
- What to Do If You Have a Negative Balance?
- What to Do if You Have a Negative Balance in a Closed Account?
What Causes a Negative Balance on Your Credit Card?
Let’s look at 5 common reasons…
- Return a Purchased Item
Depending on the credit card you used, you may get a refund to the credit card you used (E.g. Discover It Cash Back). Maybe those clothes you gifted your son or daughter were too small for them and needed to be returned. Or that Amazon purchase you’ve made didn’t meet your needs.
When making a refund to a vendor, there are times when a transaction may go back to the credit card you used. Capital One returns your money back to your checking account. Sometimes the vendor may do in-store credit.
Check your credit card company to see what’s their preferred method.
2. Overpayment on a Transaction
You may have overpaid beyond your statement balance and end up with a negative balance. Overpaying often happens when entering manual payment amounts. Sometimes this can be intentional or an accident for others.
Cancelled Fees
There’s a possibility you negotiated with your credit card company to waive a late fee. If you already paid that fee and still negotiated to get it waived, then you may receive a negative balance.
Besides fees, you may have debt or want to raise your credit limit with certain credit cards. You can advocate for yourself by calling credit card companies and using scripts to meet your financial needs. You’ll be surprised how accommodating credit card companies are to help you with your credit cards.
Fraudulent Charge Reversal
The rare case scenario is when someone uses your credit card without your permission. The amount charged is not your financial responsibility — that’s the bank’s money. The credit card company will reverse the fraudulent transaction of the total amount. You’ll get a negative balance of that total amount if you already made a payment.
You Cashed Out Too Many Rewards
Depending on the item, some credit cards have more buying power compared to others. Ranging from redeemed cashback rewards, points, and miles on specific purchases. If you overpaid in full with the rewards, then you may have leftover money as a negative balance.
Being aware of these causes will help you understand how to use credit cards better. Having a negative balance means you’re ahead of the game of paying your cards. It’s okay to not know this stuff as we all had to start somewhere when it comes to learning more about credit cards.
Does Your Negative Balance Affect Your Credit Score?
Your negative balance won’t leave a dent in your credit score. Credit card companies report your credit card balance to the credit reporting agencies on a monthly basis. For example, if you have a $6,500 credit limit and your negative balance is -$50, your new credit limit isn’t $6550. Your credit limit will still remain the same while having an extra -$50 as a leftover money credit company.
To maintain a healthy credit score, you’ll want to continue paying your card in full. Your credit utilization rate (which is the percentage of available credit you’re using in a given time), is a key factor to your credit score. The standard recommendation is to keep your utilization rate as slow as possible. Although having a utilization rate of 0%, as in a $0 balance on your card isn’t needed for a high credit score.
Knowing how your negative balance affects your credit score is anxiety-reducing. There’s no need to do much, practicing healthy credit card habits to keep or improve your credit score.
What to Do If You Have a Negative Balance?
Make a Purchase
Use your negative balance to buy something for your next grocery, billing cycle, or treat yourself. Like using that extra cash to treat yourself to a latte at your favorite coffee shop always makes.
There’s no need to pay back the negative balance unless you go over the amount you have. For example, if you have a -$150 negative balance and you spend $200, your new balance will be $50.
Request a Refund
Some credit card companies allow you to get a negative balance refunded to your checking account. Although only after a specific amount of time (usually 60–90 days).
You’ll need to reach out to your via online chat, phone call, or at an in-person branch. You can receive a refund as a paper check, direct deposit, or transfer to one of your other cards from another credit card company.
According to the Truth Lending Act, credit card companies are required to refund any negative balance that’s over $1 at a reasonable timeline. The most time-efficient process is to request a refund on your online account or call the number on the back of your card.
There’s no need to think about how to use your negative balance. The best thing to do is treat the amount the credit card owes you as your own refunded money. Now let’s go over what happens if you have a negative balance in a closed account.
What to Do if You Have a Negative Balance in a Closed Account?
If you have a negative balance on a credit card you plan on closing, the credit card company will resolve that problem first. They’ll refund your money by adding money as a negative balance before officially closing your account.
Another scenario is where you have a negative balance you want to get a refund for before your account officially closes. There’s a possibility they’ll cut off access to your account. For this scenario, call your card issuer by phone and ask for an inquiry to process a refund. The best case scenario is to call them within 30 to 60 days after your account closes.
Time to Hear From You
Having a negative balance can activate uncertainty in many people — from never being in this situation before. The negative balance is the amount the credit card company owes to their users in return. That just means you’ve been paying your credit balance on time and staying on top of your finances.
- How did receiving your negative balance make you feel?
- What did you choose to do with it?
- What questions do you still have about negative credit card balances?
Share your experiences in the comment section below to empower each other.
