Can you have a negative balance on a credit card?

It’s possible to have a negative balance—also known as a credit balance—on a credit card. And if you do have a negative balance, don’t worry. It just means that instead of owing money to your credit card company, your credit card company actually owes you.

But how does a negative credit card balance happen? Does it affect your credit scores? And is there anything you can do about a negative balance? Read on to learn the answers to these questions and more.

What you’ll learn:

• A negative balance on a credit card means your credit card company owes you money. 

• A negative balance can be caused by things like overpaying your credit card bill, getting a refund for a returned purchase or receiving statement credits.

• If you have a negative balance on your credit card, you can either spend it by using your card or request the money back from your credit card company.

A negative credit card balance simply means your card issuer owes you money equal to the negative dollar amount shown on your statement. It’s the opposite of a positive credit card balance, where you owe your credit card company money. Another name for a negative balance is a credit balance. Both refer to the same thing.

You might not have a negative credit card balance very often. But if you do have one, it could have happened for a variety of reasons, such as:

If you’re chipping away at your credit card balance with multiple payments, you might accidentally pay your credit card company more than you mean to. You might even accidentally add an extra digit or hit the wrong button when making a payment. And if you pay more than your current balance, you’ll end up with a negative balance.

Getting a refund from a merchant is another way you might end up with a negative balance. If you pay off your balance before getting a refund or if the refund is more than your current balance, that refund will result in a negative balance.

If you have a rewards credit card, you might earn rewards in the form of a statement credit that’s applied to your balance. And that statement credit could result in a negative balance if it’s more than your current credit card balance.

For example, Capital One’s Quicksilver card offers a one-time $200 cash bonus to new cardholders who spend $500 on purchases within the first three months of opening the card. The $200 balance is rewarded as a statement credit. Depending on where your balance currently stands, you could end up with a negative balance as a result of that additional $200.

If a credit card fee is charged to your account and later waived, it could possibly result in a negative balance. Credit card fees may be waived for a variety of reasons. For example, credit card companies may sometimes waive yearly fees for military members on active duty.

If you’ve already paid down your balance and a fraudulent or disputed charge is credited to your account by your credit card company, it could lead to a negative balance.

Having a negative credit card balance probably won’t hurt your credit scores. In fact, a negative balance could actually help you improve your credit scores.

A negative balance could potentially affect your credit utilization ratio—a measure of how much of your available credit you’re using. Experts recommend using no more than 30% of your available credit. And if you have a negative balance on a card, that card will not raise your credit utilization ratio. 

However, the effect of a negative balance on credit utilization ratio is typically temporary. You usually can’t keep a negative balance on your card indefinitely, and the benefit will last only as long as the negative balance does.

Carrying a negative credit balance doesn’t mean your card’s credit limit is higher—even though it may seem that way. Your credit limit stays the same.

Let’s say your credit limit is $5,000 and you have a negative balance of $100. That doesn’t mean your credit limit becomes $5,100. It just means that you can charge up to your existing credit limit plus the negative balance.

Think of it like this: Your credit limit is still $5,000. And your credit card company owes you $100.

If you have a negative credit card balance, you won’t lose the money. In fact, if you want to do something about your negative balance, you have these options:

You could choose to spend down the negative balance. Think of a negative balance as an account credit. Just use your credit card like you normally do, and your credit card company will apply the account credit toward your purchases. Eventually, you won’t have a negative balance.

If you have a negative balance and want the money back, you can make a written request to your credit card company for a refund. Your credit card company might also accept requests in person or over the phone.

If you overpay your credit card by more than $1 and request a refund, your credit card company must send you a refund within seven business days of getting your written request. The refund may come in the form of a bank account deposit, cash, a check or a money order.

And even if you don’t ask for a refund, your credit card company must try to issue one if you don’t make any other purchases for more than six months.

A negative credit card balance is nothing to worry about. It just means that you either overpaid your credit card bill or your credit card company has lowered your balance due to a refund, a charge reversal, a waived fee or a statement credit. You also have options for your next steps: You can spend the extra money until you no longer have a negative balance or request a refund. 

A negative balance won’t hurt your credit and might even help temporarily by reducing your credit utilization ratio. However, a negative balance on a credit card isn’t a long-term path to improved credit. If you’re looking for the right credit card to help you build credit, you can compare credit cards and apply online with Capital One. You can even get pre-approved for a credit card to get a better idea of which cards you may be eligible for—with no impact on your credit scores.