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Negative balance on a credit card: How it happens and what to do

The credit card company may owe you money, but you can't charge it 27.99% interest or an annual fee.

Justin Cupler

Contributing Writer at Tally

May 7, 2020

So, you got your credit card statement in the mail and ripped it open, expecting a $0 balance. Instead, you find there is a negative balance on your credit card. No, this probably isn't a typo or a rogue negative sign on the bill.

What does a negative credit card balance mean?

Having a negative credit card balance on your account means that you are owed money from your credit card company. Another way to look at it is that you paid more than that total balance that was due and are due for a credit to your account.

We'll cover how you can end up with a negative balance, whether the credit card company will pay you back and how it will affect your credit score. Here's what that negative number means.

How can you get a negative balance on your credit card?

A negative balance on your credit card isn't some form of trickery. Instead, it means that the credit card company owes you money for once. There are a few ways this can happen. 

You overpaid your credit card bill

A common cause of a negative balance on your credit card statement is that you paid more than you owed. If you make online payments through the credit card's website, the issuer will generally keep you from paying more than your credit card balance. 


However, if you write a check or pay your credit card through your bank account's online bill pay, the credit card company will accept the overpayment and post the overage on your statement as a negative balance. 

For example, if you owed $100, but accidentally mailed in a $150 check, you would have a –$50 balance on your next statement. 

You returned something you bought with the credit card

Perhaps you bought an item on a credit card then did the wise thing by paying off the balance quickly. However, you soon learned the product you purchased wasn't what you needed or was broken, so you returned it. Since you already paid off the balance, that return will hit your credit card and create a negative statement balance. 

For example, if you bought a shirt for $10, paid off your credit card the following week, then realized it was the wrong size and returned it, your credit card would have a –$10 balance. 

You cashed out too many rewards

If you're working with a cash-back rewards credit card and prefer to use the rewards as statement credits, you can mistakenly apply too many rewards to your balance. This miscalculation will create a negative credit card balance, much like overpaying your credit card via check. 

What can you do when you have a negative balance on a credit card?

Though the credit card company has your extra cash, it won't hang on to it and refuse to give it back. One way or another, you will get this cash back, but the method by which you receive the money is generally up to you. 

Here are some of the common ways you can get this cash back.

Just wait it out

Credit card companies are not out to keep hard-earned cash you don't owe them. If you end up with a negative balance on your credit card, you can kick back and wait for the credit card company to handle it.

Even if you don’t request a refund, your credit card company is required by law to make a good-faith effort to return the cash to you if the negative balance remains for six months. If you've since moved and haven't updated your address, you'll want to do that online or over the phone, or the card company's good-faith effort may end up in the wrong mailbox. 

Waiting for six months is far from an ideal situation, though. With so many options for receiving the cash, it’s best to use this option only in extreme circumstances, like if you’re out of the country for an extended time.  

Request a credit balance refund

If you're in a pinch for money, that credit balance may come in handy. To expedite the process of getting your cash, you can call the credit card company's customer service team via the phone number on the back of the card and request a refund. Some credit card companies will offer you several refund options, including a check or even a direct deposit into your bank account. 

Regardless of the refund option you choose, it will still take a little time for the credit balance refund to get to you. When you request a refund, the law gives credit card issuers seven business days to send the funds to the cardholder. If you choose to have a check mailed, the post office will take several additional days to get it to you.

In some cases, you may want a paper trail backing up your request for a refund. In these instances, you can send a written request for a refund via certified mail to the credit card company. 

Use the credit card

That negative balance on your credit card is almost like cash in your bank account. Instead of waiting for a check to arrive in the mail, you can simply use the credit card for future purchases to zero out your balance. 

For example, if you have a –$25 balance on your credit card, simply buy $25 worth of items in the store to get back to a $0 balance. 

In some cases, it may be hard to hit the credit amount exactly, but most stores can split payments. If this is the case, you can put the exact credit amount on one card and pay any remaining balance in cash or with a debit card.

So, if you have the same –$25 balance and spend $26.95 at the store, you can ask the cashier to run your credit card for $25 to zero out the negative balance and pay the remaining $1.95 with your debit card or cash. 

What do you do with a negative balance on a closed credit card account?

If you accidentally make an overpayment to your credit card company then cancel the account without realizing the credit card company owes you cash, you may think you can bid those dollars farewell. Fortunately, the six-month law requiring credit card companies to return any overpayments to you is valid on closed accounts too.

You can also call the credit card company or send a certified letter to expedite the refund process. In this instance, the credit card company has seven business days to initiate a refund. 

Will a negative credit card balance affect your credit score?

Having a negative credit card balance is not a big deal to your personal finances, as you will get that cash back one way or another. But since a negative balance lowers your credit utilization ratio, which is your account balance minus your credit limit, it’s logical to assume it’ll improve your credit score

Well, it won't. While the credit balance technically results in a negative credit utilization ratio in terms of raw numbers, the credit bureaus don't see this negative balance. Instead, this negative balance shows up as a zero balance on your credit report. 

It's your money, and the law says so

Regardless of the process you use to request a credit balance refund, the law says that negative balance is your money. And with a firm understanding of the options for receiving this cash, you can better determine the refund route that's best for you.

If you don't need the money now and are too busy to sit on hold with your credit card company? You can wait it out, and the credit card company will get the cash to you eventually.

If you're in a financial pinch or just want the cash sooner than later, you can use the credit card to purchase items that add up to the negative balance or call the credit card company and request a credit balance refund as a check or direct deposit.