Negative balance on credit cards

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.

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.