Just keep in mind that you have a sort of short-term credit for whatever the negative balance amount happens to be. For example, if you have a negative balance of $100, you won’t add to your new balance until you’ve spent more than $100. You don’t have to spend a negative balance immediately or all at once. You can simply maintain your normal spending habits until your balance is back to zero.
If you had already paid this fee, along with the rest of your balance, and then put in for the waiver, the amount refunded will show up as a credit balance. While a negative balance won’t change your credit score, it can temporarily impact how much you can spend on your card — but it ultimately doesn’t raise your credit limit. Below, CNBC Select reviews how a negative balance occurs, its effect on your credit score and credit limit and how to bring your balance back to zero. Negative account balances can occur for several reasons, but regardless of the cause, a balance below zero isn’t a bad thing.
What Do You Do With a Negative Balance on a Closed Credit Card Account?
Encountering a negative statement balance can trigger a cascade development of financial repercussions, underscoring the significance of promptly addressing this issue. Whether it pertains to personal accounts or business finances, a negative statement balance can lead to various adverse consequences that warrant careful consideration. Understanding your statement balance is crucial for maintaining financial stability and making informed decisions about spending, saving, and debt management. If the statement credit exceeds your outstanding balance, you’ll have a negative credit card balance. CreditCards.com is an independent, advertising-supported comparison service.
- Open a savings account or open a Certificate of Deposit (see interest rates) and start saving your money.
- If you do see a negative balance on your credit card summary, there’s no reason to panic.
- Let’s face it — there’s a lot of jargon and high-level talk in the credit card industry.
- EDITORIAL DISCLOSURE All reviews are prepared by CreditCards.com staff.
These strategies will demonstrate your creditworthiness to lenders and may help you build a better credit score. In case the lender had made an earlier unsuccessful effort to refund you the money before six months are up, it does not need to engage in this effort again after the mandated six-month time frame. If the money remains on your account for more than six months, the lender is obliged to make a good faith effort to refund you the money. This includes putting in an effort to trace you using your last known telephone number and address. If this effort is not successful, the law doesn’t impose any further obligation on the lender.
The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners. 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. If a large negative balance exists—say, $1,000 or more—the cardholder can request a refund from the credit card company via check or direct deposit. Though it often makes more sense for larger balances, having a larger negative balance is not required to request a refund.
Savings Accounts & CDs
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. It’s in a cardholder’s best interest to use any negative balance on a credit card statement. Once the negative balance has been used up, the cardholder may continue to make purchases or close the account if desired. Bankrate.com is an independent, advertising-supported publisher and comparison service.
We are compensated in exchange for placement of sponsored products and services, or by you clicking on certain links posted on our site. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. Whether you’ve returned a purchase or gone through the process of disputing a charge, a negative balance is a sign that your funds were returned. For example, you buy a sweater for $75, but decide to return it. If your credit card balance is zero at the time of your refund, your balance will be -$75.
Is your credit limit higher when carrying a negative balance?
For instance, you may find yourself with a negative balance as your account is about to officially close. Your online access may already be cut off at this point, so you’ll want to contact your issuer and request a refund as soon as possible. If you have a negative credit card balance, you don’t have to actually do anything. You can make purchases on your credit card as you normally would.
It just means that instead of owing money to your credit card company, your credit card company actually owes you. With Chase for Business you’ll receive guidance from a team of business professionals who specialize in helping improve cash flow, providing credit solutions, and managing payroll. Choose from business checking, business credit cards, merchant services or visit our business resource center. Ultimately, nothing really happens if you have a negative credit card balance. But still, you want to check in on your account regularly to make sure you don’t wind up with a negative balance.
Open a savings account or open a Certificate of Deposit (see interest rates) and start saving your money.
If you apply for a credit card, the lender may use a different credit score when considering your application for credit. For example, let’s say your credit limit is $5,000 and you have a negative balance of $100. It just means that you can charge up to your existing credit limit plus the negative balance. Getting a refund from a merchant is another way you might end up with a negative balance.
NerdWallet Canada’s picks for the best credit cards include top contenders across numerous card categories. Technically, yes — a negative balance will increase your credit limit. As soon as the negative balance is cleared, your available credit will fall back to its previous limit. For example, if you have a $5,000 credit limit but a credit balance of $100, you can spend up to $5,100.
The Truth in Lending Act, implemented by Regulation Z, offers protections to consumers who use credit. This law offers a guideline for lenders on how to deal with a negative balance situation, or credit balance, in a consumer’s account. For instance, you might have overpaid your last credit card bill what is an accrual difference between acrrual accounting and cash accounting by mistake. Maybe you typed in the wrong figures on your online payment or overpaid because of some other oversight.
That might mean paying for a purchase that requires a refund or paying off a balance before a statement credit is issued. The negative balance is, thankfully, a sign that your money is being returned to you. Sometimes, a refund you receive for a returned purchase could go through after you’ve already repaid your credit card balance. For example, if you were to repay a $50 balance while waiting for a $50 refund to process, your balance would go down to -$50 once the pending transaction applies to your account.
The negative balance will zero out or become a positive balance as the cardholder charges additional purchases. Negative credit card balances act as a kind of temporary credit on your account. If you have a zero balance, they will give your credit limit a temporary increase.