The amount on your credit card includes both purchases and interest. If you pay off your credit card bill each month, your balance will be $0.
However, some individuals wind up with a negative credit card balance. What does it mean if your credit card balance is negative?
A negative card balance is primarily favorable, as it suggests that you have likely overpaid for something at some point.
Credit card balances in the negative are a temporary credit. A minus sign shows before the dollar amount when money is reimbursed to your account.
If you have a $5,000 credit limit and a $170 credit on your statement, your credit limit will be $5,170. After the negative balance is used, your credit limit will be $5,000.
The rapid increase of a negative credit card balance may also lower credit utilization, thereby enhancing your credit score.
A second possibility involves refunds. With a negative balance, it's clear that you've either requested a refund or contested a charge.
After paying a payment, receiving a statement credit may also result in a negative balance. Typically, cash back cards give statement credits.
If you close your credit card account while carrying a balance in the negative amount, the issuer will likely give a refund before closing the account.