Why My Credit Card Has Negative Balance?

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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?

Negative Balance on Credit Card

A negative card balance is primarily favorable, as it suggests that you have likely overpaid for something at some point.

What is it?

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.

An Example

The rapid increase of a negative credit card balance may also lower credit utilization, thereby enhancing your credit score.

Another Reason

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.

What If I Need to Close A/C?

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.

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