Typically a credit card balance unveils all the purchases, and the interest levied during the billing phase. Once you settle the figures with the bank; the balance adjusts back to a zero. If you carry forward the balance and interest figure, it gets tallied to your credit card balance.
Though sometimes, the figures can be completely contrasting, showing you a negative balance. Does that mean the bank owes you some money? We will have to understand what it implies in reality.
- 1 What is a Negative Balance on a Credit Card?
- 2 Causes Behind a Negative Credit Card Balance:
- 3 Remedial Measures to Adjust the Negative Balance:
What is a Negative Balance on a Credit Card?
The negative balance on credit cards indicates that the card-issuing institution owes you some money. It has nothing to do with reducing your possible credit limits. The negative statement signifies that you exceeded the paying limits from what you actually owe.
However, the situation is not completely enjoyable, and you have to take adequate measures to rectify the flaw. So, let’s evaluate the scenario behind the negative balance.
Causes Behind a Negative Credit Card Balance:
1) Purchase Returns and Refunds:
Sometimes, we make purchases, but later we return the item for some reason. In such cases, the charges will be credited, but the credit balance can go negative after the initiation of the refund.
2) Exceeding Bill Payment:
A negative balance is shown when you make the payment twice by mistake. Even when you exceed the actual payment amount of the credit card bill, the figures go negative.
3) Charge Reversal of Fraudulence:
Fraudulent practices happen when your card is lost or misplaced, and some other person conducts a financial transaction without your knowledge. Once it is brought to the notice of the card issuer; the transaction reversal can result in a negative credit balance.
4) Credit Statement:
This typically occurs in a reward credit card that fetches you a cashback after the purchase. In case you had a zero balance before, the amount can be shown as a credit statement and the reward as a negative credit balance.
5) Fees Cancellation:
You may settle for a payment of late fees and other charges with the card issuing authority. However, if you have already cleared the balance comprising those charges, cases like this also attract a negative balance on your credit statement.
Read more: How To Increase Credit Limit
Remedial Measures to Adjust the Negative Balance:
Whenever a negative balance shows in your statement, you need to resolve the situation with patience. There is nothing much you can do except taking some remedial measures.
Seek Expert Advice from Your Card Issuer
You need to understand what caused the negative balance in the first place. So, by having a conversation with the card issuer, you can get a clear picture regarding the negative balance. You will then, probably would know the reasons that caused such a balance on your credit card statement.
They have all the practical knowledge to guide you through the situation. Accordingly, you can take steps to bring it back to the positive numbers.
Request To Refund the Excess Amount
The excess amount resulting from the negative balance can be transferred to your savings bank account. It’s a good way to accelerate the process if you have an urgent financial requirement. For this, you can initiate a request to the authorities because it is similar to the statement credit.
In this case, the authorized person is available to help you out to transfer the negative balance. It can be replaced directly with a money order, bank check, or cash amount. Whichever refund option you select, it will take some time before it finally gets resolved. When you encash the negative balance, you get the advantage of not having to pay interest on spending.
Go for a Purchasing Option
The matter of a negative balance can also be resolved without taking any additional steps. When you purchase any item through your credit card you can bring back the balance to the positive figures. The negative balance actually gives credit for a short duration, irrespective of the amount.
Just go with the flow of regular purchasing routine using the credit card to adjust the balance to zero. There is no need to spend compulsively when you see a negative balance. For instance, you have a negative balance of $75, and it won’t reflect on the credit statement until you compensate by paying an extra $75.
Managing your personal finances takes a toll on your mind while calculating the various aspects. So, if you are bothered about your credit scores, it is time to take a breather. The negative balance has no impact on your credit score; rather it will reflect that you are prudent with your payments. Also, you can perceive it as a prepayment made on your behalf from the credit card for your upcoming purchases.