Shannon Terrell
Erica Corbin
If you notice your credit card balance has dipped below zero, don’t panic. A negative balance on a credit card is typically the result of an overpaid bill and is easily rectified.
What is a negative credit card balance?
A negative balance on your credit card means that your card provider owes you money. While uncommon — and potentially alarming on first encounter — a negative credit card balance can be easily resolved. Two common methods include making a purchase to utilize the owed credit or requesting a deposit of funds to your bank account.
4 reasons you may have a negative balance on a credit card
Your credit card balance represents your account activity. Having a negative balance can be brought about in multiple ways.
1. You overpaid your credit card bill
If you pay more than you owe on your credit card statement balance, you’ll have an overpaid credit card. It can happen if you accidentally overestimate what you owe on your credit card or make multiple manual payments monthly.
2. You received a statement credit
Some credit card rewards can be redeemed as a statement credit. If the statement credit exceeds your outstanding balance, you’ll have a negative credit card balance.
3. You got a refund
If your credit card is paid up and you return something that was charged to the card, you’ll likely see the transaction reflected as a negative balance.
4. A fraudulent charge was reversed
Just like when you initiate a credit card refund, reversing a fraudulent charge on your credit card may bring your balance into the negative.
What can I do with a negative credit card balance?
Depending on your credit card provider, there may be a few different ways to resolve a negative balance on your credit card.
Contact your credit card company
If you are confused or in doubt about the nature of your negative balance, you may want to contact your card provider. Your provider can verify that your credit card statement is correct and answer any questions you have.
Buy something
A negative balance is basically an account credit. Making a purchase in excess of what your card provider owes you will eliminate the negative balance.
For example, let’s say you have a negative balance of $50 on your credit card. Then, you go out and use your card to pay for an $80 dinner with friends. Your credit card balance would then reflect an owed balance of $30.
Request a credit balance refund
Your card provider may be able to issue a refund for your negative balance. Instead of spending the credit by making new purchases, you get a cash refund for the negative balance via cheque or direct deposit to a linked bank account.
Will a negative credit card balance affect my credit score?
No, a negative balance won’t affect your credit score. Your payment history, credit utilization ratio, credit variety and length of credit history impact your credit score. A negative balance is typically interpreted as a $0 balance, which will have a neutral impact on your credit score.
Is my credit limit higher when carrying a negative balance?
Technically, yes — a negative balance will increase your credit limit. But the effect is temporary. As soon as the negative balance is cleared, your available credit will fall back to its previous limit.
For example, let’s say you have a credit card with a $1,000 credit limit and a negative balance of $50. The result is a temporary credit limit of $1,050. However, your credit limit will drop back to $1,000 once you clear the negative balance by making a purchase or receiving a credit balance refund.
Can I overpay my credit card before a big purchase?
You may be able to intentionally overpay your credit card ahead of a big purchase if you need some additional room on your card, depending on your card provider. An overpaid credit card will temporarily expand your credit limit, which may help you avoid an overlimit fee — a fee card providers charge for exceeding your credit limit.
If you regularly overpay your credit card to make room for increased spending, you may want to consider contacting your provider and requesting a credit limit increase.
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