What is negative balance on your credit card

Confused about a negative balance on your credit card? Find out what it means, and why it can be good for you.
What is negative balance on your credit card
3 min read
14 Oct 2023

What is a credit card negative balance

The first thing you check on your credit card statement is the outstanding balance amount. A negative balance can leave you confused. But it's not something to worry about.

What is a negative balance

When your credit card balance goes below zero, it's called a negative balance. Instead of you owing money, the credit card company owes you. This usually happens when you pay more than you owe or get a refund added to your account.

Example: Suppose your credit card outstanding amount is Rs. 2,000, and you pay a bill of Rs. 3,000. It leaves your account with a negative balance of Rs. 1,000. Usually, the bank won't process a refund, but your credit limit stays the same until you have utilised the surplus of Rs. 1,000.

Reasons why you might have a negative credit card balance:

  • Overpayment: A negative balance can occur if you make a payment that exceeds the amount owed on the card. This means that you have a credit balance or overpayment on your account.
  • Refund: You may have returned a purchase or received a refund, resulting in a negative balance.
  • Rewards: If you redeem credit card rewards and the amount exceeds your current balance, it can cause a negative balance.
  • Credit card fees: Some credit card issuers may charge you an annual fee or other fees that may build up and result in a negative balance.
  • Merchant Error: Sometimes merchants may overcharge you or charge you twice for a transaction. This can result in a negative balance on your credit card if you receive a refund.

What to do about a negative balance on a credit card

Contact your card provider: If you are unsure of the reason for the negative balance, it is easy to find out the reason by contacting your bank’s customer care.

Request for a deposit: If it is a substantial balance, you can request a refund to your bank account or in cash. The refund will be at the bank’s discretion.

Spend: You can use the balance for one or more purchases at your convenience.

Having a negative balance is not actually negative. It means you have an extra balance that might have happened because of multiple reasons like an overpayment, cash back etc.

Keep track if you have a negative balance on your credit card, and make good use of it.

Explore some Bajaj Finserv co-branded credit cards here.

It may sound strange but a negative balance may lower your credit utilisation ratio. Using more than 30% of your credit limit usually affects your credit score. So, a negative balance can be a good thing for your credit score.

If you have a negative balance on your credit card, keep track of it. It can be good your credit utilisation ratio, but be cautious to not overspend and accumulate debt. Always try to pay your bills on time and keep an eye on your credit card usage to avoid any financial trouble.

Frequently asked question

Can I use the negative balance?

Yes, you can use the negative balance on your card to make one or more purchases. It is up to you how you want to use it.

What should I do if the balance of my credit card is negative?

Firstly, having a negative balance on your credit card is not a bad thing. It means that you have a surplus amount on your card. You can check for the exact reason of the surplus with your card provider and use the negative balance for purchases.

Why does my credit card show negative balance?

It means that you either overpaid against your card or you have received some cash back or rewards. Having a negative balance on your card is not something to worry about.


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