There Are Positives with a Negative Credit Card Balance


The idea of a negative credit card balance may initially cause you to flinch. After all, when it comes to finances, anything attached to the word “negative” is not a good sign of good financial health.

On the contrary, a negative balance on your credit card may just be one of the positive negatives you can achieve with your finances. If you need more breathing room on your credit card but are working with a limited credit limit, overpay your account and create a negative credit card balance. Doing so gives you more spending power by artificially increasing your credit card size, aka the amount you can spend with your card.

Somehow, in a small way, a negative credit card balance can help with your financial milestones.

But before you go about and create a negative balance on your credit card, it pays to know the basics first.

So What is a Negative Credit Card Balance?

Simply put: you paid more on your credit card than what you owe. If you recently received refunds for purchases you’ve already, accidentally overpaid on your credit card balance due or have received statement credits for rewards, you may see a minus sign on your next credit card statement. It may seem like an odd situation, but getting a negative balance on your card is normal.

What Happens If You Have a Negative Balance on Your Credit Card?

woman paying at the counter

When your credit card balance is negative, your card issuer owes you money. Attaining a balance doesn’t automatically mean you did something wrong.

Most of the time, there is a mistake with your account, such as the following:

  • Canceled credit card fees. These include annual fees, late fees or interest charges — any charges that follow after you’ve already paid down your total balance.
  • Refunds on previous purchase. This situation may apply to people who, months earlier, booked plane tickets and accommodations for trips. Recently, the COVID-19 pandemic resulted in massive flight cancellations, which led to more people receiving refunds due to their canceled travel plans.
  • Removal of fraudulent charge or a mistaken transaction. Sometimes, this happens when people pay off their balances in full without looking at the fine print of their statements. Always pay close attention to your monthly statements so you can correct errors or dispute fraudulent charges.

The Positives That Come with a Negative Credit Card Balance

Why should you try to get a negative balance on your credit card?

Two big benefits come with an overpaid or negative credit card bill: increased spending power and cash advances.

Increased Card Purchasing Power

If you have plenty of big purchases coming your way, a negative credit card balance offers the breathing room you need. For instance, if you have a lower credit limit, use this strategy to increase the amount you can charge on your credit card. When you start posting transactions with a negative balance, you won’t touch your available credit. Instead, you’ll be using your negative balance.

But keep over-limit fees in mind. You may have the power to exceed your credit limit with your over-limit fees. But if you do not set these limits up and make a purchase that exceeds your limit, your purchase will be declined.

In most cases, credit cards are already set-up to accommodate over-limit fees unless you requested your issuer to not exceed your limit. With that in mind, call your issuer and let them know if you are planning to make a big purchase. This way they’re notified and can immediately alert you if you get declined.

However, over-limit fees come with a cost. Most issuers charge $35 and above when you go beyond your credit card limit.

With a negative balance on your credit card, you can pay for large purchases without incurring over-limit fees since you won’t go beyond your credit limit.

Cash Advances

If you need to advance money for bigger purchases (especially if you are traveling internationally), a negative balance can help you avoid high-interest rates. Any money you spend will be from your negative balance, which helps you avoid interest charges.

These advantages are enticing but before you set out for a negative balance on your credit card, here are a couple of things to consider.

Considerations Before Creating a Negative Credit Card Balance

wallet with cards

  • Ask to increase your credit limit. Asking for a credit limit increase simplifies your task. With an increased credit limit, you don’t have to worry about using up all of your balances or making larger purchases. Keep in mind, however, that there are no guarantees that this will work since your card issuer can decline the request for a limit extension. Still, there’s no harm in requesting since many issuers allow their cardholders to increase their limits.
  • Get a prepaid credit card. If your credit score is making it difficult for you to get a larger credit limit, supplement your credit card with a prepaid card. You can load your money onto the card and make all the purchases you want.

Will a Negative Credit Card Balance Hurt Your Credit Score?

Ultimately, a negative credit card balance won’t hurt your credit score. It has no impact at all since both your credit limit and score will stay the same. The only difference is that your card issuer is required by law to send you back the money.

How to Get a Negative Balance on Your Credit Card

So how can you get a negative credit card balance? Consider the following:

  • Overpay your statement. Attain a negative card balance by paying more than what you owe. It is also within your control. When you pay your credit card bills, just pay more than what you owe, not what your monthly statement says. Also, add up any pending purchases since they can take away from your negative balance. To overpay your credit card statement, just follow the equation “Previous bill + pending transactions + new purchases + desired negative balance = the amount you pay.”
  • Rewards issued as a statement credit. This applies to cashback credit cards that offer payment rewards annually. Application of these rewards translates into statement credits that appear on your credit. If the reward amount is larger than what the issuer owes to you, you will have a negative balance on your credit card.
  • Reversed fraudulent charges. In case your account ends up with false fraudulent charges, the reversal will count as an account credit.
  • Purchase refund. When you return purchases you’ve made, they end up as a credit on your account. But if you make the purchase and the return within the same statement, there won’t be a negative credit card balance. This will only offset your original purchase.

How to Get Your Negative Balance Back

The easiest way is to keep making purchases on your credit card since each purchase will eat into your negative balance. The result: a smaller credit card bill balance next time.

Another way to get it back is to call your credit card issuer and request for a refund. In most cases, they’ll send you a check but they can also deposit the money into a linked bank account. However, they won’t be paying any interest.

You can also leave the balance alone and decide later. If you struggle with saving money or like the idea of having extra money on your credit card, leave your balance untouched. It’s not a form of passive income, though. If you feel safer or more comfortable with a negative credit card balance, use it as a savings tool. If you need to get through another year (and your current job needs help), a negative credit card balance can save the day.

The Bottom Line: It’s Your Money

You have a right to your negative balance. By law, you are entitled to receive a refund. Even if you don’t if you ignore your credit card account or don’t check your statements for several months, credit card issuers are required to refund any negative balance in your account.

A negative credit card balance is one of the positives in the world of finances — if used wisely. If you have more questions, get in touch with your card issuer to learn more.

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