What is a credit card balance that is negative?
When your credit card balance falls below zero, it appears as a negative figure on your statement. While this may appear to be a negative, it is actually the contrary. This means that instead of the other way around, your credit card company owes you the money.
So, how can something like this happen? There are various methods for obtaining a negative balance, including:
- Paying off a credit card amount in full.
- Receiving a refund for a returned product after you’ve paid off your debt or for a greater amount than your existing balance.
- Reversal of a fraudulent charge.
- After you’ve paid off your balance, you’ll get a statement credit.
What should you do if you have a credit card balance that is negative?
So, what can you do if you have a negative balance on your account? You’ve got alternatives! You can do the following:
- Request a refund through check, money order, or direct transfer into a bank account from your credit card issuer. Issuers must repay the balance within seven business days of receiving your written request, according to the Truth in Lending Act.
- Consider your credit card’s negative balance as a credit toward future purchases. You can spend it by using your credit card to make purchases until the negative balance on your account is exhausted or you have a balance on your account again.
- Do nothing and wait for a refund—as long as your contact information is up to date, your credit issuer will send you a refund for the amount you owe. While credit issuers may have their own refund policies, the Truth in Lending Act compels them to make a good faith effort to refund any credit balance remaining in an account after six months if you don’t take any action.
What if the balance on a closed account is negative?
You can still obtain funds from your former credit provider if you have a negative balance on a closed credit card account.
The quickest way to seek a refund is to contact the creditor and make a request. This should help to speed up the process.
You can also do nothing and the credit provider is compelled to refund the funds to you after six months, just like with an active account. The crucial thing to remember about the “do nothing and wait” approach is that if the credit issuer doesn’t have your most recent contact information or bank account information—in other words, they don’t know where to send your money—you could lose it.
Is it true that having a negative balance affects your credit score?
No, a negative balance has no effect on your credit score, positive or negative. A negative balance isn’t recorded to any of the credit reporting agencies because it doesn’t affect your payment history, so it’s not factored into your credit score.
With negative balances, the bottom line is
Finally, while it may be aggravating to have overpaid an amount, there is nothing to be concerned about if your account shows a negative balance. Negative balances are not only harmless to your finances, but there are also simple ways to either use the balance to your advantage or have it repaid.