Credit cards aid us to meet financial obligations as and when they occur. The amount used on a credit card gets added to the card balance. One has to pay the card balance before the payment deadline to avoid interest charges. The card balance is usually positive and denotes the amount to be paid to the credit card issuer. Via credit card payment online, you can clear your dues before the deadline. In some situations, one may see a negative card balance. Read on to know the meaning of a negative balance on your credit card.
Understanding a Negative Balance on the Credit Card
A negative balance on your credit card signifies that the credit card issuer owes you money. Usually, it is the debtor who pays the owed amount to the credit card issuer. Due to exceptional scenarios, the credit card issuer may have to return your money. When you check the card balance, a minus (-) sign may appear before the amount. Let us see the reasons why one may see a negative balance on their credit card.
Reasons for a Negative Balance on a Credit Card
The reasons why your card balance is negative are as follows:
- Negative balance on your credit card can denote overpayment of the credit card bill. Consider your card balance to be paid is INR 10,000. However, you made a payment of INR 11,000 to the credit card issues. In such a case, INR 1,000 will be your negative balance, and the credit card issuer owes you the amount.
- Credit card users make merchant payments via their credit cards. Some merchants offer a refund for product return or failure. Your credit card issuer might show a merchant refund as a negative balance.
- Consider a credit card issuer finding a wrong processing fee or a late fee. In such a case, the issuer will offer a refund to the credit card user. It may refund the wrongly deducted fee in form of a negative balance. Sometimes, credit card issuers offer a return/refund on annual fees and interest charges as a matter of customer service.
- Sometimes, credit card issuers offer statement credits to users. Statement credits also lead to a negative credit card balance. Airline credits are an example of statement credits offered by issuers.
- Users often discover an unauthorised or false charge on their credit card. They submit a complaint to the credit card issuer asking for a chargeback. A chargeback from the credit card issuer might result in a negative card balance.
Do I have to Worry About a Negative Card Balance?
You don’t have to worry about a negative balance on your credit card. A negative balance on your credit card isn’t going to hamper your credit history or score. Negative balances will not be seen on the credit reports. You can check your credit report, and it will always be INR 0. Your credit card account may show a negative balance. Since a negative balance isn’t considered in credit reports, it does not impact your credit score.
What To Do After Discovering a Negative Balance on the Credit Card?
Actions to take after discovering a negative balance on your credit card are as follows:
- Once you discover a negative balance on your credit card, you can ask for a refund from your credit card issuer. Your credit card issuer will not immediately offer a refund for a negative balance until you submit a request. Credit card issuers offer refunds for a negative balance by checks, bank transfers, and money orders.
- You are always allowed to use the negative balance to make a purchase or transaction via your credit card. The credit card issuer will automatically deduct your negative balance for new purchases.
- You can also decide to do nothing after discovering a negative balance on your credit card. According to the law, credit card issuers have to refund the negative balance if it sits more than a specified period.
A negative balance on your credit card doesn’t put you in a bad light. A negative credit card balance is the amount of money the credit card issuer owes you. You can choose to claim a refund for the negative card balance. Know more about negative card balance!