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Negative Balance On A Credit Card

5 min read

Negative Balance On A Credit Card

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A negative credit card balance might seem confusing, as it is not a common scenario for cardholders. This article will explore what a negative balance is, how it can occur, what to do about it, and provide reasons why individuals might find themselves with a negative credit card balance. Lastly, we'll discuss what happens when one has a negative balance, including its effects on your credit limit.

How a negative credit card balance can happen

A negative credit card balance occurs when your credit card account shows a credit in your favor. This can happen for several reasons:

  1. Overpayment: You might have accidentally paid more than the outstanding balance on the card.

  2. Refunds or returns: If you returned merchandise or received a refund for a purchase that was charged to the card, the refund amount would be credited back to your account, potentially creating a negative balance.

  3. Credits from rewards programs or promotions: Some credit cards offer cashback, statement credits, or promotional offers that can result in a credit to your account.

What to do about a negative balance on a credit card

If you find yourself with a negative balance on your credit card, don't panic. The easiest and most effortless solution is to continue using your card as you normally would. The negative balance will offset future purchases, essentially giving you a head start on those charges. If you prefer not to wait, you can contact your credit card provider and request a refund for the overpayment or negative balance.

How To Get Your Money Back From a Negative Balance

To request a refund for a negative balance:

  1. Contact your credit card provider's customer service department via phone or by logging into your online account.

  2. Explain that you have a negative balance on your card and would like a refund.

  3. Be prepared to provide account details and answer security questions.

  4. Your credit card provider will process the refund request and send you a check or deposit the funds directly into your bank account.

Reasons why you might have a negative credit card balance

As mentioned previously, you may find yourself with a negative credit card balance due to:

  • Overpayment on your account

  • Refunds or returns of merchandise

  • Account credits from rewards programs or promotions

Is my credit limit higher now that I have a negative balance?

No, a negative balance on your credit card does not increase your credit limit. A negative balance is merely a credit to your account, offsetting future purchases. Your credit limit remains the same, and once you use up the negative balance, you'll begin utilizing your regular limit again.

The bottom line

A negative balance on a credit card can happen for several reasons, most commonly due to overpayments, refunds, or account credits. If you find yourself with a negative balance, you can either continue using your card to offset future purchases or contact your credit card provider to request a refund.

Remember that a negative balance does not increase your credit limit, and once the negative balance is used up, your credit card usage will go back to utilizing the regular credit limit.

Understanding the reasons behind a negative credit card balance and how to handle it ensures that you remain financially savvy and in control of your personal finances.

Note: KOHO product information and/or features may have been updated since this blog post was published. Please refer to our KOHO Plans page for our most up to date account information!
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