Negative balance on credit cards

When you buy items with your credit card, the money you owe makes up your credit card balance. You can pay this off in full or make at least the minimum payment shown on your credit card statement each month. But what should you do if you see a negative balance on your credit card statement?

Written by

The Editorial Team

Experts in personal finance, insurance and utilities

Last Updated

1 JULY 2024

5 min read

What is a negative credit card balance?

Having a negative balance on a credit card means you’re in credit with your card provider rather than in debit. In other words, your balance is below zero, so your card provider owes you money, instead of the other way round.

You’ll see it shown as a minus sign in front of your credit card balance – which can seem confusing at first.

While a negative balance on your credit card account isn’t anything to be concerned about – unlike a negative balance on a bank account – it’s important to understand why you’re in credit and what you can do about it.

Why is my credit card balance negative?

There are several reasons your credit card might have a negative balance:

A refund for a returned item – the refund may have come through after you paid off last month’s credit card balance.
Cancelled fees – your credit card provider may have issued a refund for a late fee or interest charges you paid on a previous balance.
Fraudulent charge reversal – if someone uses your credit card details without your permission and you report it, any fraudulent transactions you’ve paid for should be reversed by the credit card provider.
Credit card overpayment – perhaps you paid your last credit card bill twice by mistake or paid more than the outstanding balance.
Statement credit – if you have a rewards card that offers cashback, the amount you’ve earned may have been credited to your card account.

Top tip

Always check that your credit card statement is correct. It’s easy to miss a suspicious transaction, especially if you tend to pay off your balance in full without looking too closely.

How can I fix a negative balance on my credit card?

You don’t have to do anything if you have a negative balance. The money is yours; you’re not going to lose it. But if you prefer to take control of your money, you could:

Spend it
You could use the extra credit to make purchases on your card as you normally would, until the balance is no longer negative. Just be careful not to ‘overspend’, knowing your card is in credit.

Ask for a credit balance refund
You can ask your credit card provider to transfer the amount directly into your bank account. With a UK card issuer it will usually have to be paid into a UK bank account.

You might want to put your money to better use, especially if it’s a large amount. For example, it will work harder for you in a savings account or a high interest current account.

Most credit card providers will give you a cash refund via cheque or bank transfer, but check your terms and conditions to be sure.

Leave it there
You could just leave the money in your credit card account for the time being. It can be handy to have a little extra to fall back on or to use towards the next month’s balance.

If you haven’t spent the credit after six months, your credit card provider is legally required to send you the refund – usually in the form of a cheque or bank transfer.

Can I get a refund if I owe money on my credit card?

If you have an outstanding credit card balance to pay, any credit added to your account will automatically go towards paying off your credit card bill. You won’t have a choice.

For example, if you owe £800 on your credit card and receive a refund for £600, it will be used to reduce the outstanding balance and you’ll owe £200.

But if you owe £600 and you receive a refund for a past purchase that cost £800, you’ll be able to pay off your credit card and have a negative balance of £200. In this case, you could ask for the remaining £200 to be transferred to your bank account.

Who should I speak to if my credit card balance is negative?

If you have a negative balance and don’t know why, contact your credit card provider. They should be able to explain the reason.

Keep an eye on your finances

Whether it’s your credit card or bank account, it’s always a good idea to keep on top of your finances. That way you’ll know exactly what you owe and what may be owed to you.

With that in mind, it’s also wise to check your credit report from time to time. Having a good credit score could improve your chances of being accepted for a credit card, loan or mortgage.

Frequently asked questions

Will a negative balance affect my credit score?

No, a negative balance on your credit card won’t improve your credit score but it won’t harm it either.

This is because a negative balance isn’t factored into your payment history. Your card issuer won’t tell the credit reporting agencies that you’re in credit. This means any lender or business that checks your credit report won’t know that you have a negative balance.

However, your credit utilisation ratio – the amount of credit available to you that you’re using – for that card will show as 0%, so this could work in your favour.

Will a negative balance affect my credit limit?

No. Having a negative balance doesn’t mean that your credit limit will increase. For example, if your credit limit is £5,000 and you have a negative balance of £200, your limit will stay the same. It won’t increase to £5,200.

Can I switch credit cards while I have a negative balance?

If you switch credit cards, you won’t be able to add the negative balance to your new card. That money is owed to you by your current credit card provider, not your new one.

If you want to close your existing credit card account, you’ll need to ask for a credit refund to your bank account or spend the negative balance on your card before closing the account.

Can I take out my credit card balance in cash using an ATM?

You can withdraw cash using a credit card, but it’s not the best way to use the balance. Most credit card providers charge a cash advance fee on cash withdrawals and potentially interest too. The fact that you’re in credit won’t make a difference.

It’s better to ask your provider to pay the money into your bank account or send you a cheque.

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