What Is a Negative Balance on Your Credit Card?

Take advantage of a negative balance by using the credit to cover a purchase, or ask your issuer for a refund.
Jae Bratton
By Jae Bratton 
Edited by Kenley Young

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Imagine: You open your credit card app to check the state of your finances, only to find a negative number in a blood-red font.

Before you log out of the app in a panic, know that a negative balance on your credit card is a good thing, even though it can look and sound scary. Think of it as the digital equivalent of finding extra cash you'd forgotten about in your coat pocket.

Here's what to know about a negative credit card balance, how it occurs and what to do if you have one.

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What is a negative credit card balance?

A negative credit card balance, also known as a credit balance, means that your card issuer owes you money. A negative balance is created when you pay more toward the account than you owe.

Here are some scenarios that could result in a credit balance:

  • You overpaid your bill. Make a payment greater than your statement balance, and you’ll end up with a negative balance. Overpaying your credit card could be a mistake — you mistyped the payment amount, for example — or intentional. Some people choose to overpay their credit card, effectively creating a prepaid spending account. Overpaying can make it seem like you’re ahead on bills, a mental trick that might make budgeting easier.

  • You were issued a refund. Maybe you were overcharged for a product or service and the merchant agreed to credit the difference. Or perhaps you returned an item, and instead of store credit, you received a full refund to your credit card. Either one of these scenarios could result in a negative balance if the refund amount is larger than your current credit card balance.

  • You received a statement credit. One of your credit card benefits might be an automatic statement credit, a common perk among cards with annual fees, such as the Chase Sapphire Preferred® Card or American Express® Gold Card. (Terms apply.) These credits might be doled out annually or monthly and could lead to a negative balance if the credit amount exceeds the amount owed to the issuer.

  • Redeemed rewards. Many credit cards, especially those of the cash-back variety, allow cardholders to earn rewards that may be redeemed for statement credits that reduce the monthly balance. A negative balance is the result of a statement credit that’s more than the monthly balance.

🤓Nerdy Tip

Rewards redeemed for statement credits lower your monthly balance but do not count as a regular payment. To avoid late payment fees, be sure to pay at least the minimum amount due out of pocket. Pay the full balance due and you’ll avoid interest charges, too.

What can I do with a negative credit card balance?

You can do a few things with a negative credit card balance, but if you want a refund, know that policies may vary from issuer to issuer.

  • Buy something. Or a few things. The cost of your purchases will be deducted from the negative balance first. You won’t need to make a credit card payment unless the amount of your purchases is greater than your credit balance.

  • Get a refund. Some issuers will deposit the negative balance amount into a bank account or send cash, a check or a money order. Ask the issuer about your options.

Refunds may be requested in writing, in person or via the phone. Again, you’ll need to ask the card issuer about the procedure for obtaining a refund.

However, all issuers are required by law to send a refund within seven business days of receiving a written request from a cardholder for refunds greater than $1. Issuers must also refund any negative balance amounts on accounts that haven’t posted any purchases for more than six months.

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