Did you just come across a negative sign in front of your credit card balance? You might be worried about what this means and how it can impact your finances and credit score.

Don’t fret, just yet! It just means that the amount paid to your credit card company is more than the amount you currently owe them. The negative amount is the balance your card company now owes you.

Why Do You Have A Negative Balance On Your Credit Card?

The negative balance or extra credit usually shows a minus sign before the dollar amount when checking your credit card. (For example: -$100.00).

You can generally spot the negative balance on your monthly statement and the main page of your online account when you log in. While a negative balance might sound “negative,” it is usually positive for the user because they’ve paid more than they owe the card company.

Possible Explanations For Why Your Credit Card Balance Is Negative

Paying off all your credit card bills means having zero credit card balance. Here are a few reasons why you may have a credit card balance below zero:

  • Excess payment: This scenario is quite likely, and it just means you have overpaid your bills. You may have made a manual payment and accidentally entered an amount more than due. You may have also paid twice by making a manual and automatic payment.

  • Refunds made for a certain purchase: You may have purchased something online and returned the product. The refund you received may be more than the amount owed to your credit card company, resulting in a negative bank balance.

For example, you may have bought a dress for $100.00 and may have later returned it to the shop from where you purchased it. If your credit owed to the card company was $80.00, and you received a refund of $100.00, your balance would now be -$20.

In a scenario where you have already paid off your monthly credit card bills, this new transaction creates a negative balance for your total amount due for the month. While other transactions show up with no sign in front of the amount (for example, $10.00), refunds show a negative charge such as -$10.00.

  • You earned rewards/a joining bonus from your credit card company: Many credit cards, like Vital Card, give their customers rewards that they can cash in on later, as well as joining bonuses. If you recently redeemed a reward or joining bonus, this might have resulted in a negative balance.

  • Reversal of a fraudulent charge: Credit card companies investigate fraud to prevent incorrectly billing you for purchases you did not make. The Fair Credit Billing Act limits a customer’s liability in the case of a stolen credit card to $50.00. |

So, in a case where someone used your credit card or account information to make purchases without your permission, you may be credited back by your card company. This reversal of the transaction can lead to a negative credit balance.

Do not worry. In all of these situations, there are various steps you can take to restore your credit balance to zero and recover the balance amount.

Plan of action: How to proceed when your credit card balance is negative

There are many ways you can utilize the funds in your credit card balance. Here are some of the ways:

Spending Money

The easiest and most obvious way is to make new purchases. Your credit balance returns to zero when your purchases become equal to your negative balance. The only thing to keep in mind is to spend the exact amount to avoid paying back the remaining balance later.

Reach Out to Your Credit Card Company

Regardless of whether it was an excess payment, a refund, or the reversal of a fraudulent charge that resulted in a negative balance, you can always reach out to your credit card company. They can reimburse the amount to you to nullify the balance amount. They typically respond in one of the following ways:

  • Refunding the balance amount within seven days
  • Crediting your account with the negative balance amount
  • Refunding the amount to you through cash, cheque, or money order

All credit cards must send you the refund amount within seven days of sending them a written request. Make sure to follow up if you haven’t heard back from them in seven days to ensure it was issued and processed correctly.

It is also important to remember that all creditors have their policies in place in addition to legal requirements. Reading up on your credit card company’s procedures on responding to a negative credit card balance can help you understand how you can approach such a solution.

This advice is especially important since creditors are not obligated to revert if they cannot trace important details such as your current location, etc.

Let your account reflect a negative credit card balance

A negative credit card balance isn’t necessarily a disadvantage, and you can always wait for your credit card issuer to rectify the issue. Even going several months with a negative balance will likely not cause any harm.

You can take the time to figure out whether you want to make purchases with the balance amount or close the account and request the amount back.

What to do if your negative balance is very significant

A negative credit card balance is usually not something to worry about. But it may trigger a fraud alert if the negative balance amount is very significant.

In cases where you accidentally added an extra zero to your payment amount, your credit card company may get suspicious of financial fraud. The company may either freeze your account or close it in this unlikely scenario.

Either reaction can cause inconveniences. The ideal response is to call your credit card company as soon as you see this large figure reflect in your account. They will likely immediately work to rectify this error.

How a negative balance affects your credit score

A negative balance does not impact your credit score in any way. Economically speaking, the lower the utilization ratio (the amount of credit you have used compared to the amount available), the better it is for your credit score.

However, it is also important to remember that overpaying your bills to have a negative credit card balance will not boost your credit score. Your credit card limit will also remain the same, although it can temporarily impact how much you can spend.

To put this in perspective, if your credit card limit is currently $5,000 and your credit card balance is -$500, your credit card limit will not become $5,500.

Legal recourse: Truth In Lending Act It is important to be aware of your rights. While you can use the negative balance amount in various ways, you always have legal recourse in the rare case your creditor does not take accountability.

Thanks to the Truth In Lending Act, all consumers who use credit are protected. The law offers guidelines that creditors must follow when dealing with a negative credit balance situation in their consumers’ accounts.

Under the act, your credit card company can do any of the following:

  • Refund your credit balance amount right away
  • Grant a refund before you put in a request
  • Send the money to you after you put in a formal (oral/online) request for it

You’re good to go, even if your credit balance is negative A negative credit card balance does not have any long-term impact on your financial affairs, so you have nothing to worry about. But it is usually wise to be cautious since managing your credit card bills is key to your financial freedom.

Mismanagement of your credit card can lead to a bad credit score, and you may be subject to high-interest rates. You may miss out on many benefits and have fewer lenders willing to loan you money.

Signing up for early access to Vital can help you boost your credit score and get 1.5% cash back on all purchases. We also offer world-class customer service and are happy to help if you doubt your credit card bill.


Fair Credit Billing Act | Federal Trade Commission

Disputing Credit Card Charges | FTC Consumer Information

Truth in Lending | OCC

VITAL Card blog posts are intended for informational purposes only and should not be considered financial or any other type of advice.