Negative balance on credit cards

Imagine opening your credit card statement and you have a negative balance. But what does it mean? And is it good or bad?

Here’s what it means to have a negative balance on your credit card and what you can do about it.

Imagine opening your credit card statement and you have a negative balance. But what does it mean? And is it good or bad?

Here’s what it means to have a negative balance on your credit card and what you can do about it.

Rob Silvey
Finances expert
5
minute read
Do you know someone who could benefit from this article?
Posted 16 FEBRUARY 2022

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? 

Don’t panic. While a negative balance on your bank account is not good news, a negative balance on your credit card account should make you smile. It usually means your card provider owes you money. 

That said, it’s important to find out why you’re suddenly in credit and what you can do about it.

What is a negative balance on a credit card? 

If you see a minus sign in front of your credit card balance, it means you have a negative balance. In this case, instead of you having to make a payment, your card provider owes you money.

What causes a negative balance? 

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

  • A returned item refund – say you bought a dress, then changed you mind and returned it. The refund may have come through after you paid off last month’s credit card balance.
  • Cancelled fees – your credit card provider may have agreed to waive a late fee or interest charges you’d already paid for on a previous balance, so they’re issuing a refund to your account.
  • Fraudulent charge reversal – if someone uses your credit card details without your permission and you report it, any fraudulent transactions you’ve already paid for will be reversed by the credit card provider.
  • 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 mistake or 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 in particular 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, there’s a few things you could do: 

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
It’s your money and you don’t have to spend it on your card. You can ask your credit card provider to transfer the amount directly into your 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 it there for the time being. If you don’t use your card much or you aren’t great at saving, it’s handy to have a little extra to fall back on. 

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 I have a negative balance on my credit card? 

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

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?

A negative balance on your credit card won’t improve your credit score, but it won’t harm it either.

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.

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