Negative Credit Balance: The Secret Banks Don’t Want You To Know
How The Banks Might Owe You Money!
If you owe money to your bank and don’t pay on time, you’ll be bombarded with phone calls and legal documents.
What happens when the bank owes you money, and you have not realized it? Do not expect a bank to contact you then.
It is easy to realize that the bank owes you money when your credit card is still in use. But what if you have already settled your debt and canceled a credit card account years ago?
If you have employed financial products such as a loan, credit card, debt settlement plan, or a consolidation of multiple cards and loans, there could be balances left in all products.
Some of these balances will be negative, meaning your bank will owe you money. These balances can vary anywhere from a few cents up to thousands of dollars.
It is up to the consumer to check these negative balances, as the banks are not obligated to notify anyone of a negative credit balance.
Can A Balance Be Negative?
The balance in our bank deposit accounts is (almost) always positive. We can monitor our bank balance can via bank statements, ATMs, web banking, or mobile banking applications. Deposit accounts illustrate our funds in the bank, though.
In the event of borrowing money from a bank, be it through a loan or a credit card, the statements should also reflect a positive balance.
In other words, it is irregular for a balance to be negative.
Negative Balance In Deposit Accounts (Overdraft)
A negative balance can occur in deposit accounts, usually when the overdraft option is enabled, essentially turning your deposit account into a loan.
Sometimes a negative balance can also appear when a rare system error allows the depositor to withdraw more money than they have without the overdraft option enabled.
Yet, we do not examine deposit accounts here but the negative balance on our credit cards and loans.
The banks will not be that eager to give you your money back.
They know they owe you money,money, but they will do nothing about it until you demand the money back.
Negative Credit Balance
It is critical to understand how a credit card or loan balance can turn negative.
Here, it is the bank that owes money. In this scenario, the tides have shifted, and this is money your bank owes you!
Indeed, if you have taken out retail loans and credit cards and either canceled or entered a settlement, it is likely that your bank owes you money. However, the banks will only reimburse the funds if you request it.
With no action from their customer, the banks will do nothing. The funds will remain in place, and the banks will not notify the customer apart from the final statement that shows this negative balance.
And I will give you one more hint. This happens way too often.
Ask your bank for the details of the balance of credit cards and loans you have closed in the past to find out.
Millions of people are unaware of the negative credit balance on their accounts.
These balances could range from a few cents to thousands of dollars.
The bank will always announce the final balance after a customer exits a loan or credit card with a final statement. Still, millions of people overlook this final balance. They think the bank statement is incorrectly displaying their balance and don’t recognize what the negative credit stands for.
Reasons A Negative Balance Can Happen
There are several reasons such a “mistake” can happen but usually, the amounts are not that much to care about.
The issue is with canceled credit cards and loans, or those that closed and balances moved into a new loan acting as a settlement.
We can attribute the presence of a negative balance in credit cards or loans to one of these causes:
- Debt consolidation with the cancelation of existing credit cards or retail loans and transfer of balances. In this case, the bank will have to calculate the remaining interest manually, but it will frequently use incorrect rates often leading to negative balances.
- Overpayment or duplicate payment.
- Refunds after the cancelation of a purchase on a canceled credit card.
- Purchase Reversal. The bank can reverse any transaction for various reasons. It can be a fraudulent transaction the bank identified and returned.
- Cashback and other bonus rewards.
It can be from a payment, a bonus, or a chargeback, depending on the features of each credit card. No matter the state of the credit card or how long ago the bank stopped servicing it, it can always have a balance.
The amounts can vary between a few dollars and thousands of dollars. Banks can erase small balances (negative or outstanding) to reduce accounting costs.
The issue is when debt restructuring occurs. In this case, mistakes happen, and the negative credit balance will increase the total debt and interest.
The bank will only notify once with the final statement for each credit card and loan, but it will not proceed with any other action unless the lender requests it.
Creditors often overlook the final statements, thinking the negative balance could be a mistake or not realizing the bank owes them this money illustrated as a negative balance.
A negative credit card balance does not affect credit scores and does not pay interest. Depending on each bank’s regulations, some will ask for withdrawal fees, but, not when the credit card account has been canceled.
What To Do
Banks have been striving to regain the public’s trust since the 2008 financial collapse. The difficulty lies in the trust prerequisites of the banking sector and the disreputable history of insolvencies and corrupt activities.
There are issues a creditor could face when emphasizing on trust.
Countless credit card owners in the US (and millions globally) are unaware their bank owes them money. Furthermore, some banks will impose fees that will steadily deplete the smaller balances.
Negative balances in loans and credit cards are your money, not the bank’s.
From my perspective and experience, I recommend scrutinizing the balances of any expired or canceled credit card or retail loan.
Also, have the bank report the current balances of loans and credit cards that previously entered a settlement, as during calculations, the mistakes that occur can be worth even several thousand dollars.
Identify the card and loan numbers you used and contact your bank if you have suspicions. You will lose an hour of your time, but you might correct a mistake and locate missing funds that could even be thousands of dollars.
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