What causes a negative balance on a credit card – and what to do

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    Occasionally, there’s a glitch in the matrix, and we see things that shouldn’t be there – like seeing a negative balance on a credit card. While it’s weird and can be a little unsettling, there are various reasons why it can happen. 

    Let’s talk about why you might get a negative balance when you open your next credit card statement, how to deal with it, and knock out any myths surrounding its effect on your credit score.

    How does a credit card end up with a negative balance?

    You’re reviewing your budget on a Sunday morning, and after logging into Mint (or YNAB), you notice a negative balance on your credit card. Weird? Absolutely. Worrying? No. There are plenty of valid reasons you might see a negative balance, including any of these:

    woman's hand holding a credit card

    Manual and auto payments coincided.

    While this is infrequent, it can happen if you forget that you have a scheduled auto payment set up with your credit card issuer. If you make a manual payment, and then a monthly auto payment happens, you can overpay your account’s current balance. Or, you forgot you canceled recurring future purchases and overpaid by accident.

    You’ve overpaid your credit card account.

     Usually, making a manual payment online won’t allow you to pay more than what’s on the card, but the overlap of payments can. 

    In a rare case, this could happen but isn’t as likely as some of the other scenarios listed here. If you pay by check, there’s more room for error or adjustments to happen before the payment is applied since this method isn’t online.

    You returned an item to a store for a credit back on your card. 

    If you return an item to a store, often they’ll apply the credit back to your card. If you pay off your card in full with a monthly payment, this can cause a negative balance. 

    Your account has had a fraudulent charge removed.

    Usually, credit card companies are very good at catching potential fraudulent charges – in fact, usually a little too good sometimes! However, one slips through once in a while, and neither you nor the company notices it. 

    Let’s say you catch the charge after you’ve paid your monthly bill. Once you dispute the charge and the company dismisses it, you will have a negative credit card balance.

    You earned a statement credit or applied too many rewards.

    One of my credit cards offers excellent benefits, from $50 off a hotel stay to credits for Lyft and DoorDash. You can have a negative balance by paying your card off and then having one of the credits applied to your next statement. 

    By not factoring in your reimbursement for services or applying rewards from the credit card company, you can overpay your bill by accident. It’s easy to do, especially if you don’t keep track of all of your card’s benefits and forget which reimbursements are offered (ask me how I know).

    You’re a negotiation wizard and had fees canceled or reduced.

    Seriously, I’m super proud right now if you can do this. You’re a great negotiator if you can arrange a lower interest rate (similar to what Trim or Truebill does) or get the company to knock off annual fees, late fee, or other extra expenses. Again, if you’ve paid off your bill in full and then get reimbursed for the yearly fee, that can easily cause your account to go negative. However – it’s totally worth it for the glory of extra savings!

    What happens if your credit card has a negative balance?

    Nothing much happens if your credit card has a negative balance. The only potential issue is if you are trying to close the account. The credit card company won’t let you close the account until the balance is back to zero. Otherwise, it’s a big mess they don’t want to deal with.

    While it’s not the best use of your money, there’s no penalty from the credit card company or effect on your credit score (more on that later).

    How to get rid of negative balance on credit card

    You have a couple of options to try if there’s a negative available credit after payment. Each is relatively easy and don’t take too much work:

    Request a check or deposit.

    You can always request a credit card negative balance refund. This option is the best route to take if the total amount is more significant, and you won’t be likely to charge that much anytime soon. Call customer service, and ask that they pay the credit back to you. You can request a check, money order, or direct deposit into your checking account.

    Purchase something with your credit card.

    The next option (and quickest) is to make new purchases for the negative amount (or more) on your credit card. Making additional purchases will quickly bring your account back onto a positive balance. Don’t forget to pay your new balance off to avoid interest charges on your next monthly statement.

    If you’ve lost the card, tried to shut down the account, or are still unsure how to handle a negative balance, reach out to your credit card company’s customer service. Whether it’s Chase, Bank of America, Discover, American Express, or another lender, they’ll be happy to help and offer any other suggestions on how to fix the situation.

    Legal Responsibilities of Credit Card Companies considering a negative balance

    Thankfully, there’s a regulation with the Consumer Financial Protection Bureau that credit card companies must handle these issues in a particular way to help protect consumers.

    Thanks to the Truth in Lending Act, you can choose to make a written request to the billing inquiries department (not the payment center) for a refund. The creditor must refund your remaining credit balance within seven business days as a good-faith effort. This deposit can be made via cash, check or money order, or your bank account.

    You have up to six months after your negative balance to get your refund, thanks to the protection offered by this act. 

    If the creditor doesn’t know your current location and can’t track you down, they aren’t required to do anything else. Because of these unclaimed refunds (and others), the government has set up the unclaimed money site to help consumers track missing money.

    To learn more about how to dispute charges as well as the lending act, visit:



    Is it bad to have a negative balance on credit card?

    No, it’s not a bad thing to have a negative balance. However, there are a lot of misconceptions about how it might affect your credit score: 

    • It won’t hurt – or help – your credit score. Overpayments aren’t reported to the credit bureaus and will appear as a zero balance, and don’t affect your credit utilization ratio.
    • Therefore, it won’t factor into your payment history on your credit report.
    • You won’t have a higher credit limit, it’s still the same as before.
    • You can’t make any interest from the overpayment like you would with money in a savings account.

    One last not so good thing to note – large negative balances can be a warning sign to banks of refund fraud or money laundering. You’ll want to avoid this, so you don’t get flagged and your accounts or credit frozen. 

    Banks do this for consumer protection; however, it can be a huge pain and bring your life to a grinding halt. If you mistakenly end up with a large negative balance, call customer service right away to discuss the issue. They’ll help you to fix your account and avoid any problems.

    Now that you know what happens if you overpay your credit card bill learn more about the parts of a check and how to write one

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    A forty-ish web designer/developer by day, a budget & financial fanatic by night. I’m a mom, wife, avid reader, and DIY enthusiast who’s tracking our journey to debt freedom. Read More

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