How a Negative Balance on Your Credit Card Affects You

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Understanding Negative Balances on Your Credit Card

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding your credit card balances. For any mortgage service needs, call us at 213-732-3074.

What Can Cause a Negative Balance on Your Credit Card?

A positive balance on a credit card means you owe money to the credit card company. However, you can also have a negative balance, which appears as a credit on your statement. Here are some situations that can lead to a negative balance:

• Fraudulent charge reversal: If unauthorized charges are reversed, it could result in a negative balance if you’ve already made a payment.
• Returned purchase refund: If you return a purchase after paying your bill, the refund could create a negative balance.
• Overpayment of the bill: Accidental overpayment can lead to a negative balance.
• Canceled fees: Waived fees after payment can result in a negative balance.
• Statement credit: Redeeming rewards that exceed your current balance can create a negative balance.

Does a Negative Balance Affect Your Credit Score?

Having a negative balance does not impact your credit score. Your credit utilization rate, which is the percentage of your available credit that you’re using, is a key factor in your credit score. A negative balance does not affect your credit limit; it simply means you can charge up to your limit plus the negative balance.

What to Do if You Have a Negative Balance

If you notice a negative balance on your credit card, you have a few options:

Request a Refund

Some credit card issuers automatically provide a credit balance refund after a certain period. If you want the money sooner, you can request a refund directly through your online account, via live chat, phone, or in person at a local branch. Refund options may include direct deposit, a paper check, or a transfer to another card with the same issuer.

Make a Purchase

Another option is to make purchases to spend down the negative balance. For example, if you have a -$200 balance and spend $250, your new balance will be $50.

The Bottom Line

While a negative balance on your credit card is uncommon, it’s not a cause for concern. You can either make purchases to use up the credit or request a refund. Monitoring your credit regularly is a good practice to understand how your credit card usage impacts your credit score.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.

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