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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 if you see a negative balance on your credit card statement?

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 if you see a negative balance on your credit card statement?

Written by
Alex Hasty
Insurance comparison and finance expert
Last Updated
27 MARCH 2023
5 min read
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What is a negative credit card balance?

Essentially a negative balance means you’re in credit with your card provider rather than in debit. So your card provider owes you money, instead of you having to make a payment.

While a negative balance on your bank account isn’t good news, a negative balance on your credit card account should make you smile. You’ll see it shown as a minus sign in front of your credit card balance – which can seem confusing at first.

That said, 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 returned item refund – 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 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 you fix a negative balance on your 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’d prefer to take control of your money, you could:

Spend it
You could use the extra credit to make purchases on your card. 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 it’s a good idea to check your terms and conditions just in case.

Leave it there
It might be a good idea to just leave the money there 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.

Just be aware that 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. 

So, if you owe £800 on your credit card, then receive a refund for £600, it will be used to reduce the outstanding balance and you’ll still 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 will make it far easier to apply 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. See more on the ideal credit utilisation ratio.

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. Check out our guide to increasing your credit limit.

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?

It’s probably not a good idea to do this. 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.

The content written in this article is for information purposes only and should not be taken as financial advice. If you require support on the products discussed here, please speak to your bank/lender or seek the advice of an independent professional financial advisor. We also have more information on our Customer Support Hub.

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