Can you have a negative balance on a credit card?
What it means to have a negative balance and what you can do if you overpay your credit card.
May 17, 2022 4 min read
It’s possible to have a negative balance—also known as a credit balance—on a credit card. And if you do have a negative balance, don’t worry. It just means that instead of owing money to your credit card company, your credit card company actually owes you.
But how does a negative credit card balance happen? Does it affect your credit scores? And is there anything you can do about a negative balance? Read on to learn the answers to these questions and more.
What is a negative balance on a credit card?
A negative credit card balance simply means you’ve paid your credit card company more than you owe.
How a negative credit card balance can happen
You might not have a negative credit card balance very often. But if you do have one, it could have happened for a variety of reasons.
Here are a few reasons why you could have a negative balance:
Overpaying your credit card bill
If you’re chipping away at your credit card balance with multiple payments, you might accidentally pay your credit card company more than you mean to. You might even accidentally add an extra digit or hit the wrong button when making a payment. And if you pay more than your current balance, you’ll end up with a negative balance.
Refunds for returned purchases
Getting a refund from a merchant is another way you might end up with a negative balance. If you pay off your balance before getting a refund or if the refund is more than your current balance, that refund would result in a negative balance.
If you have a rewards credit card, you might earn rewards in the form of a statement credit that’s applied to your balance. And that statement credit could result in a negative balance if it’s more than your current credit card balance.
If a credit card fee is charged to your account and waived, for whatever reason, it could possibly result in a negative balance.
Fraudulent & disputed charge reversals
If you’ve already paid down your balance and a fraudulent or disputed charge is credited to your account by your credit card company, it could lead to a negative balance.
Does having a negative balance impact credit scores?
For example, a negative balance could potentially affect your credit utilization—a measure of how much of your available credit you’re using. Experts recommend using no more than 30% of your available credit. And if you have a negative balance, your credit utilization for that card would be less than 30%—which could be good for your credit scores.
Is your credit limit higher when carrying a negative balance?
Carrying a negative credit balance doesn’t mean your card’s credit limit is higher—even though it may seem that way. Your credit limit stays the same.
For example, let’s say your credit limit is $5,000 and you have a negative balance of $100. That doesn’t mean your credit limit becomes $5,100. It just means that you can charge up to your existing credit limit plus the negative balance.
Think of it like this: Your credit limit is still $5,000. And your credit card company owes you $100.
What you can do about a negative credit card balance
If you have a negative credit card balance, you won’t lose the money. In fact, if you want to do something about your negative balance, you have options:
Spend down the negative balance
You could choose to spend down the negative balance.
Think of a negative balance like an account credit. Just use your credit card like you normally do, and your credit card company will apply the account credit toward your purchases. Eventually, you won’t have a negative balance.
Request a refund
If you have a negative balance and want the money back, you can make a written request of your credit card company for a refund. Your credit card company might also accept requests in person or over the phone.
If you overpay your credit card by more than $1 and request a refund, your credit card company must send you a refund within seven business days of getting your written request.
And even if you don’t ask for a refund, your credit card company must try to issue a refund if you don’t make any other purchases for more than six months.
Don’t worry if you have a negative balance
Remember: Don’t worry if you have a negative balance. It happens. And if you do have a negative balance, you have options.