But you still cannot run up a balance that results in you owing more than $10,000. Having a negative balance isn’t a big issue on a credit card the way it would be in your checking or savings account. If you have a negative balance on a credit card then any future charges you make will go toward using up the overage until your balance is back to $0. After that, your purchases will work the way they always do and can accrue interest charges if not paid off before your next payment deadline.

  • If you have a negative balance on your credit card account, the simplest way to bring your balance back to $0 is to make new purchases.
  • You’ll get credit card notifications about your balance, payments due and more, depending on what you opt into.
  • So you’ll want to be in communication with the issuer to ensure you get your money back and that you get it transferred to you in the way you want it.
  • Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
  • We’ll answer all your questions about negative credit card balances, including how to get your money returned, how a negative balance affects your credit score and limit, and more.

Understand the debt-to-income ratio and its significance in personal finance. Learn how to calculate your debt-to-income ratio and why lenders use it. Nathan Grant, a senior finance industry analyst with MoneyTips, said it ultimately helps chip away at the balance, even if the offer is for a limited time.

If you have a negative balance while closing a credit card account, it’s likely that the card issuer will settle that by refunding the money before officially closing the account. However, you may find yourself with a negative balance if you get one last refund right before the account is officially closed. In this case, contact the card issuer by phone and ask for an inquiry into the account to process a refund. Card issuers often don’t reflect a new balance after payment until it goes through, so you might pay twice by mistake. Whatever the reason, overpayment results in a negative balance on your card — and you have a couple of options of how to go about it.

Just Keep Spending With the Card

Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. Let’s say you sent in $902 to cover what you thought was your full bill, but an adjustment to one of your charges dropped the actual amount due to $895. That’d leave you with a “negative balance” of $7, which really just means you sent in a few more bucks than were necessary to cover things.

A negative balance will usually sit in an account for at least 60 to 90 days before the bank may decide to refund the money via check or cash deposit into a linked account. Because the card issuer owes the cardholder, there won’t be a monthly payment required or danger of accruing interest. The cardholder can use the time to figure out whether they want to continue using the card to make purchases or close the account and request the money back as a refund. Card issuers will likely not pay you interest if you have a negative balance.

Instead of having those funds available, they’ll be going right out to line the pockets of your creditors. The interest costs in this scenario add up to many times the amount you initially paid for your items. If you want to avoid any errors in paying your card bills, there are a few strategies you can try. Credit utilization can account for up to 30% of your credit score. Having a negative balance on your account lowers your utilization of available credit on that line of credit.

And if you pay more than your current balance, you’ll end up with a negative balance. In every single month that you get stuck paying a credit card bill for past purchases, you’re going to have less money left in your checking account to spend on anything else. Looking for balance transfer credit cards with bad credit has its challenges. However, if you find yourself being limited, there are some alternatives. No, you do not owe any money if you have a negative balance on your credit card. You will not pay interest on any negative balance and it can be used to offset future spending on your credit card.

What is a negative balance on a credit card?

If you don’t have your card anymore, you can always start with a general customer service number or check out our guides to Chase and American Express card customer service numbers. If you have a checking or savings account with the bank, they may be able to wire the money to you directly. In this case, your credit limit hasn’t changed, but you temporarily increased the amount you can charge on your card. If you find out that the credit is in error, you will have saved yourself the headache of potentially owing more money than you expected on your next credit card bill. That strategy is likely to ensure that you never owe a penny of interest on your charges, but it does leave open the possibility of sending in more than you were required to pay. But keep in mind your limit will go back to its original number once you’ve used up the negative amount.

A Guide to Managing Credit Card Debt

Luckily, your issuer can still help you with that task if you set up account alerts. You’ll get credit card notifications about your balance, payments due and more, depending on what you opt into. Usually, you can set up alerts online or through the credit card app when you sign in to your account. A negative balance on your credit card does not impact the credit limit of your card. However, it may give you temporary increase in spending power with that card.

Key points about: what a negative balance on a credit card means

The easiest way to bring a negative balance to $0 is to continue making purchases using the credit card. Even if the balance turns into a positive $50 from -$300, the cardholder can make another payment to pay off the positive balance. Returning a purchased item for a refund will usually result in the vendor refunding the charge to the applicable credit card. If the cardholder has already paid off any of the card’s balance, the refunded amount may cause a negative balance on the next statement. (InvestigateTV) — Using a balance transfer offer to pay down credit cards can be a smart move, but 37% of people in debt are unaware of the option, according to a Bankrate survey. It’s also important to remember that balance transfers incur fees, further adding to debt.

Overpaying your balance won’t do anything to help improve your credit score or help make up for missed payments. Cash back rewards are bonuses provided to customers https://1investing.in/ when they use their cards to make purchases. The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.

In fact, a negative balance won’t help your score, either—negative balances aren’t factored into a credit score. However, paying down a previously high balance may give your credit score a boost. It’s worth noting that you don’t have to correct a negative credit card balance — it won’t hurt your credit score or jeopardize your account. However, if you want the negative balance to disappear, the easiest way is to make a purchase that’s equal to or larger than the credit on your account.

Fortunately, most of the time, it’s only a minor inconvenience and shouldn’t lead to any negative consequences. That said, try not to overpay too much to avoid waiting for a large sum to return to your checking account — or even having your credit card locked down due to suspicious activity. If you find yourself with a negative credit card balance, there are a few options for your next steps. However, once you make enough purchases to eat up the negative balance, your credit limit will go back to its typical amount.

Your credit utilization ratio plays a significant role in determining your credit score. If your credit balance reaches the negatives, that also means your account is likely in good standing, which reflects positively on your credit report. So, while a negative balance itself doesn’t affect your credit score, it usually indicates positive credit habits. However,  if you still have an outstanding negative balance after six months, the card issuer is required to make a good-faith effort to refund your overpayment without any action from you. TPG senior credit cards editor Matt Moffitt recently had a negative balance of more than $400 on his Platinum Card® from American Express due to a refund. Instead of spending more on his Platinum Card, he used the American Express chat feature to ask an agent to transfer the negative balance and put it toward the Delta balance.

Travel cards

Your automatic payment won’t cause you to overpay as long as you set it to pay your full balance. In addition, if you manually pay your full balance before the automatic payment takes place, the automatic payment shouldn’t take place. The payment system should recognize that you don’t have a balance, so there will be nothing to pay. Whether you want to pay less interest or earn more rewards, the right card’s out there.

Just don’t forget you have it in place or you risk ending up with a negative balance by scheduling an extra payment manually. With a credit card like the Capital One Venture X Rewards Credit Card, all you need to do is check the issuer’s app. Capital One shows your scheduled payments on top of the recent transactions section and often updates your available credit almost immediately after you make a payment.