Can You Have a Negative Balance On a Credit Card?

If you’re like many Americans, you may be wondering whether its possible to have a negative balance on your credit card. We will answer the question: Can you have a negative balance on your credit card in much detail below.

Can You Have a Negative Balance On a Credit Card?

Yes, some card issuers will allow you to have a negative balance on your credit card. A positive balance on your credit card indicates that you owe the card issuer money whereas a negative balance indicates that the card issuer owes you money. For example, if your credit card indicates that you have a -$150 balance, this means that you have a $150 credit with the card issuer. As soon as you begin spending money on your credit card, you will use up the credit on your card and will begin to accrue a positive balance. Usually, if you have a credit on your credit card, you will not have to make a monthly payment as you do not owe anything on your credit card.

You Can Have a Negative Balance On a Credit Card in the Following Situations:

Payment That Exceeds Balance

There are a number of reasons that could leave a credit on your credit card. For example, if you make a payment on your credit card that exceeds your balance, you will have a credit. Although some credit card issuers will not allow you to make a payment that exceeds your available credit, some card issuers do allow the practice, leaving you with a positive balance known as a credit.

Return & Refund

The second situation where you could see a credit on your account is if you made a purchase on your credit, you paid off your credit card, and then returned the item. In this situation, since you’ve paid off your card when the money is refunded to your credit card, your card account will show a credit.

Fraudulent Credit Card Charge Reversal

The third situation where you could end up with a credit card is when you pay off your credit card including paying off any fraudulent charges that were made on your account. If you later discover that fraud has occurred and ask your card issuer to remove the fraudulent charges, this will result in a negative balance on your account.

Statement Credit

Some card issuers offer their customer a statement credit after they’ve made qualify charges. If this happens and your card issuers issue you a statement credit, the statement credit could result in a negative balance, especially if the statement credit exceeds the balance you have on your credit card account.

Does Having a Negative Balance On a Credit Card Lower Your Credit Score?

No, a negative balance on a credit card will not lower your credit score. No negative information will be added to your credit report if you have a credit balance on your credit card. This is so because the card is paid as agreed. In fact, having a negative balance is reported as having a $0 balance, which will help your credit score because you have 0% credit utilization. The lower your credit utilization, the better your credit score will be. This is so because your credit utilization accounts for 30% of your credit score.

If you leave a negative balance on your account, you will be able to spend more on your credit card. For example, if you have a $3,500 credit limit and you have a negative balance of $350, you will be able to spend $3,850 on your credit card. This is so because you are first spending the credit on your account and you are then tapping into your credit limit. That said, leaving a negative balance on your credit card does not increase your credit limit, but it does allow you to spend more since you have a credit on your credit card account.

Should You Do Anything If You Have a Negative Balance On a Credit Card?

If you have a negative balance on your credit card account, there is nothing you need to do. In fact, as soon as you start spending money on your credit card, the credit you have will be applied to the new charges. For example, if you have a $250 credit and you charge $300 on your account, the $250 credit will be used to cover the transaction, leaving you with a balance of $50.

If you have a credit on your credit card account and you want the money, you should contact your card issuer and ask them to deposit the money into your account. The card issuer may send the money to your checking account or cut you a check in the amount of the credit on your account.

In fact, if you have a credit on your credit card, The Truth in Lending Act requires credit card issuers to refund credits that a consumer may have on his credit card within 7 business of receiving a written request from the consumer asking the card issuer to refund the credit.

If you card issuer operates out of physical locations, you can try going into your bank branch and asking a teller to give you the money in cash. Some card issuers may be willing to do this.

The quickest way to benefit from a credit on your credit card account is to simply use your credit card. If you have a credit on your credit card account, as soon as you use your credit card, you will use up the credit on your account. That said, if you need the money and can wait to get it, you can ask your card issuer to deposit the money into your savings or checking account.

What Should You Do if You Have a Credit or Negative Balance on a Closed Credit Card Account?

If you have a credit card and you’ve made a payment that exceeds the balance on a credit card that you have closed, your money is not lost. In fact, federal laws gives you six months to request that the card issuer return the credit to you. To get the credit, you should contact your card issuer and explain to them that you closed your credit while leaving a negative account balance on your credit card. The card issuer will then either deposit the money into your account or send you a check in the amount of the negative balance or credit.

Is It Bad To Leave a Negative Balance on Your Credit Card?

There is nothing wrong with leaving a negative balance on your account. Your credit score will not suffer as the result of a negative balance, and banks do not typically ding consumers for leaving negative balances on their credit cards. That said, leaving a negative balance does not help your credit, nor does it harm it because it’s considered to be a $0 balance and your credit card will be paid as agreed.

Frequently Asked Questions (FAQs)

1. What happens if you overpay your credit card bill?

If you overpay your credit card bill, you will be left with a credit or negative balance on your credit card. Leaving a negative balance on your credit card has no impact on your credit score.

2. What happens when you get a refund on a credit card with no balance?

If you get a refund on a credit card with no balance, you are left with a credit or negative balance on your account. There is nothing wrong with leaving a negative balance on your account. It happens often to many people. In fact, once you begin using your credit card, the credit balance is applied to the charges you make.

3. How long can you carry a negative balance on a credit card?

You can carry a negative balance indefinitely. There is not limit on the amount of time that your negative balance can remain on your account. That said, if you leave your account with a negative balance for too long, your card issuer may make an effort to return the negative balance to you.

4. Will overpaying my credit card increase my credit limit?

No, overpaying your credit card will not increase your credit limit. Overpaying your credit card will leave a credit on your account but will not increase your credit limit. Your credit limit will remain the same.

5. How do I remove a negative balance on a credit card?

The quickest way to remove a negative balance from your credit card is to use your credit card. As soon as you use your credit card, the negative balance will be applied to your new charges.