What does a Negative Balance on Credit Card Mean?

A negative credit card balance indicates that your credit card issuer owes you money instead of you owning them money.

Though uncommon, such a scenario may occur when funds owed to you exceed your balance due during the same credit card billing cycle.

Luckily, a negative credit card balance isn’t something to fret about and typically resolves itself easily.

How Do I Know If I Have a Negative Credit Card Balance?

You can identify a negative credit card balance by inspecting your monthly card statement.

The amount you owe will appear in brackets or with a minus sign directly in front.

For example, if you have a negative balance of $300, it will appear as -$300 or ($300).

What Should I Do If I Have a Negative Balance?

First, you should do a little digging to determine the cause of the negative balance.

It could have been the result of an error, in which case you should contact your card provider to resolve.

If there’s no error discovered, there’s a possibility that you’ve overpaid your credit card balance, or a refund was processed on your account.

In such a scenario, you can simply charge a purchase to your credit card equivalent to the negative balance amount to cancel it out.

You can also cash out the balance by initiating a cash advance.

Did You Know?

Cash advances on a credit card are typically not recommended due to the high interest rate charged, but you won’t be subject to any interest charges if you use a cash advance against a negative card balance

Looking at negative credit card balance

Why Do Negative Balances Happen?

Here are the five most common ways you can end up with a negative balance on your credit card account.

  • You overpaid – It’s possible you misread your statement and accidentally paid more than you owed. Some people may intentionally overpay to artificially boost their credit limit, keep overdraft limit fees in check, or avoid interest charges resulting from a cash advance.
  • Cancelled credit card fees – If your card provider erroneously charged you card fees that they then reversed, these will appear as a credit on your account. Suppose you charged few purchases to your card during the billing cycle. In that case, the cancelled fees could produce a negative balance on your account.
  • Purchase refund – Let’s say you purchased an item from a store during one billing cycle but returned it the next. In that case, the refund will result in a credit transaction on your account, possibly creating a negative balance. A refund can also result from funds owed to you by your card provider. 
  • Reversed fraudulent charge – Suppose you’ve been the victim of a fraudulent credit card transaction and can prove it. In that case, your card issuer will reverse the transaction, which will appear as a credit on your account. 
  • Rewards statement credit – Does your credit card offer rewards that allow you to convert your points to a statement credit? If so, your balance may end up in negative territory if you redeemed more points than what you owe on the account.

Does Carrying a Negative Balance Affect My Credit Score?

Should you discover a negative balance on your credit card account, you can rest easy knowing it won’t damage your credit score.

In fact, it may rise slightly due to a change in your credit utilization ratio, a key component that determines your credit score.

Your credit utilization ratio is a financial metric that measures your existing balance owing on a credit product relative to your credit limit.

An excessively high ratio drags down your credit score since you’re carrying a high level of debt and putting yourself at risk of missing payments or defaulting.

Conversely, a low ratio enhances your credit score, as it indicates that debt load is manageable.

Remember that your credit utilization ratio is only one factor that impacts your credit score – you may or may not see a positive impact resulting from a negative balance.

Key Insight

A negative credit card balance is reported to the credit bureaus as a zero balance.

Frequently Asked Questions

  • Can you cash out a negative credit card balance?
  • What happens if I overpay my credit card balance?
  • There are no negative or positive consequences from overpaying your credit card balance. Your account will revert to a positive balance over time, either by you choosing to cash out the overpayment or bringing the balance back to zero through future purchases charged to your card.

Mark Gregorski

Mark is passionate about educating people on how the financial markets work and providing tips to help them better manage their money. Mark holds a bachelor’s degree in finance from the Northern Alberta Institute of Technology and has more than a decade of experience as an accountant.

Outside of writing and finance, he enjoys playing poker, going to the gym, composing music, and learning about digital marketing.