What happens to a negative credit card balance?

When you carry a credit card that has an outstanding balance or a positive balance, that can be considered a negative. On the other hand, a negative balance can be a positive for you. If you have a negative credit card balance on your account the actions differ by account and creditor.

Negative vs. Positive Balance

When you make charges to the account it creates a positive or outstanding balance above zero. On the other hand, in rare cases you may have a negative balance, which means that someone has issued you a credit or refund. That credit may be from the credit card company or a retailer where you've purchased goods. Also, if you accidentally send more of a payment than required to pay off the card balance that can also create a negative balance.


In the event you see a negative balance on your credit card account that can mean that the creditor owes you money. One of two actions may occur. If you plan to keep the account open the creditor may simply leave the negative balance on the account to use as a credit toward your next credit card purchase. Otherwise, the creditor can issue a check to you for the difference.

Credit Score Effects

FICO, Fair Isaac Corporation, looks at the total balances on debt accounts as one indicator to determine the credit score. Amounts owed make up for about 30 per cent of the score and, generally, the lower the total debt balance the better the credit score. So, if for some reason you have a negative balance on a credit card that reduces your overall debt load and could increase your credit score.

Closing Your Credit Card Account

If you find yourself in a situation where you have a negative balance on a credit card you may consider simply closing the account to avoid those kinds of issues in the future. However, keep in mind that closing a credit card account with a very low or no balance may negatively affect your credit score because it can reduce your credit utilisation ratio. The credit utilisation is the percentage of debt used compared to available balances -- the lower the better for your score. So if you don't need to use the card, simply monitoring it regularly to make sure the balance stays at zero may be in order.

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About the Author

Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.

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