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What Does a Negative Balance on a Credit Card Mean?

Published June 6, 2023
4 min read

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Key points about: what a negative balance on a credit card means

  1. A negative credit card balance means your card issuer owes you money; it doesn’t affect your credit score.

  2. You could have a negative balance if you’ve overpaid your bill, received a refund, or redeemed credit card rewards as a statement credit.

  3. You can request a refund from your card issuer if you have a negative balance.

If you see a negative balance on your credit card statement, don’t panic. A negative credit card balance means your credit card provider owes you money, not the other way around. While you don’t have to worry about a negative card balance hurting your credit score, a few actions could bring it back to zero. Read on to learn how to respond if you notice your credit card balance falling into the negatives. 

What is a negative balance on a credit card?

If your credit card balance is negative, that means your account balance is less than zero. Typically, your credit card balance is the amount you owe your credit card issuer. When you buy something with credit, your balance increases. The credit card payments you make each month reduce your balance. If your balance drops below zero, that’s considered a negative balance, and it shows how much your issuer owes you. The number on your account is the amount they owe. A -$50 balance means your creditor owes you $50.

Many credit card companies allow you to check your real-time credit card balance online or through a mobile app. On the other hand, your statement balance shows the amount you owe or the status of your account at the end of each billing cycle. A negative statement balance applies to the previous billing period. Before you take any action, you may want to confirm that you’re looking at your current balance.

When can a negative balance appear on your credit card?

Negative credit card balances usually aren’t reasons for concern. Several things could push your balance into the negatives. You could overpay your bill, earn a statement credit, or receive a refund. If you’re wondering why you have a negative balance, consider the following reasons:

Refund of a returned purchase

Sometimes, a refund you receive for a returned purchase could go through after you’ve already repaid your credit card balance. For example, if you were to repay a $50 balance while waiting for a $50 refund to process, your balance would go down to -$50 once the pending transaction applies your account.

You overpaid your credit card bill

If you overpay your credit card bill, your card issuer may apply the extra funds to your account. Some credit card payment portals prevent payments from exceeding your total balance. However, you may still overpay if you have autopayments set up but accidentally pay manually as well. Cardmembers who use checks or other manual payment methods may also accidentally exceed their payment due.

Statement credit from your credit card issuer

Your credit card issuer may apply statement credits to your account as you claim certain rewards, like cash back. Your reward could exceed your balance and send your credit card balance into the negatives.

Did you know?

Some credit card issuers will let you redeem your cash back rewards as a statement credit. If that statement credit amount exceeds the balance in your account, you could have a negative balance as a result. For example, if you’re charged $100 on your credit card for the billing period, and you redeem rewards worth $110 as a statement credit, you’ll be left with a $10 negative balance. With Discover, you can automatically redeem your cash back or rewards as a statement credit every month.

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Your card issuer waived fees that you previously paid

Credit cards may come with fees, from late payment penalties to charges for specific transaction types. Your credit card issuer may sometimes waive fees, like penalties for first-time offenses. If they decide to waive a fee you’ve already paid, they typically issue a statement credit to your account. If your balance is smaller than the refund, you may end up with a negative account balance.

What can you do about a negative balance?

A negative credit card balance will not hurt your credit, so you don’t have to act unless you think it’s a mistake. However, if you’d like to bring your balance back up to zero, you have a couple of options:

  • Make a purchase. Buying things with your credit card should restore the balance to zero. Depending on how far into the negative your balance is, you can use your card like normal to cover purchases in the amount of the negative balance. 
  • Ask for a refund. You could ask your creditor to give you the funds they owe via check, cash, money order, or direct deposit to your bank account. Per the Truth in Lending Act, as the Consumer Financial Protection Bureau explains, credit card providers have a legal responsibility to issue a refund for a negative balance at a cardmember’s request.  

Does a negative balance affect my credit score?

A negative balance doesn’t have a direct impact on your credit score. However, it shows that you have a low credit utilization ratio, which refers to your credit usage compared to your overall available credit. Your credit utilization ratio plays a significant role in determining your credit score. If your credit balance reaches the negatives, that also means your account is likely in good standing, which reflects positively on your credit report. So, while a negative balance itself doesn’t affect your credit score, it usually indicates positive credit habits.

While seeing a negative amount on your credit card statement may feel jarring, a negative credit card balance is rarely anything to worry about. On the contrary, it could signal a low credit utilization ratio. If you’re concerned that the negative number may be inaccurate, contact your financial institutions customer service department for clarification. Otherwise, you can request a cash refund or just keep using your card like usual.

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