Credit Card Negative Balance: Reasons, Effects & Solution
  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors
  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors
Apply Now
01 DECEMBER, 2022

A negative balance on a credit card is possible. It simply means that one’s credit card provider probably owes them money as they have paid an excess amount.

Does a negative credit card account balance impact your credit score? Do you have any options when your balance is negative? Continue reading to find out the answers to this and other questions.

A Negative Credit Card Balance: Key Points

Is a negative credit balance good? Although it's not always bad to have a negative balance on a credit card, there are a few things to consider:

  • Positive balances have no impact on credit.
  • Negative balance on a credit card also does not help a credit score.
  • A cardholder who has a negative balance is typically in good standing.
  • It may be difficult to close a credit account with a negative balance.

Reasons to have a Negative Balance on Credit Card

It may only happen to you occasionally to have a credit card with a negative balance. When you have a negative balance, it may have occurred for several reasons.

Excessive Use of Credit Cards

When you use multiple payments to reduce your credit card balance, you risk paying your credit card company more than you intended. You may inadvertently enter an extra digit or press the wrong button when making a payment. You get a negative balance when you pay more than your outstanding balance.

Returns and Refunds for Purchases

Another scenario where you might end up with a credit balance that is negative is when you receive a refund from a retailer. A refund will result in a negative balance when you pay off your balance before receiving it or when the refund exceeds your current balance.

Account Credits

Credit card rewards may be given to you in the form of a statement credit applied to your balance. And if that statement credit is greater than your current credit card balance, it might result in a negative balance.

Lower Costs

If a credit card fee is added to your account and subsequently waived for any reason, it might result in a negative balance.

Reversals of Unlawful & Contestable Charges

You might have a negative balance when your credit card company credits your account for a disputed or fraudulent charge after you've already made a down payment.

What Effect Does a Negative Balance Have on Credit Scores?

Rest assured, your credit card credit scores won't suffer when you have a negative credit card balance. A negative balance might even help you raise your credit scores.

A negative balance, for instance, might impact your credit utilisation, which measures how much of your available credit you are using. You are advised to utilise up to 30% of your credit line.

Additionally, if you have a negative balance on that card, your credit utilisation is less than 30%, which may be advantageous for your credit scores.

Read Also : क्रेडिट कार्ड की लिमिट

Are You Allowed a Higher Credit Limit When You Have a Negative Balance?

Even though it might appear that way, having a negative balance on your card does not necessarily mean that it has a higher credit limit. Your credit limit doesn't change.

Let's say you have an Rs. 1000 negative balance and an Rs. 5,000 credit limit. Consequently, your credit limit does not increase to Rs 6,000.

Simply put, it indicates that you are only restricted to charging up to your current credit limit plus the negative balance.

Consider this: Your Rs. 5,000 credit limit is still available and you have already paid Rs. 1000 to your credit card company.

Can I use the Negative Balance?

The best course of action for a cardholder is to use any negative balance on their credit card statement. The cardholder may keep making purchases after the negative balance has been depleted or choose to close the account.

What Should I do if the Balance of MyCredit Card Is Negative?

It is important to know that you won't lose money when your credit card balance is negative. When you have a negative balance on your credit card, you consider the following options to resolve the issue.

Spend to Reduce the Balance Due

You could decide to pay off the credit balance. A negative balance is comparable to an account credit. Use your credit card as usual, and the account credit will be applied to your purchases by your credit card provider. You will only have a negative balance for a short time.

Demand for Refund

When you have a negative balance and want the money to be returned, you can send a written request to the credit card provider. Your credit card will address your issue either over the call or in person.

Adjust your Bill in the Next Cycle

It is the most typical way to use a negative credit card balance. In general, most card companies add this sum to the subsequent charge. For instance, when your account balance is negative by Rs. 2000 and you have made purchases totaling Rs. 3000 during the current billing cycle, your subsequent bill will only be Rs. 1000.

What Should You Do When a Closed Credit Card Account Has a Negative Balance?

When closing a credit card account, the card issuer will probably settle any negative balance by refunding the money before the account is closed. However, in some cases, you might have a negative balance before the account is shut down.

You can call the card company and request an account inquiry to process a refund. Do this ideally 30 to 60 days after the account closes.

Read Also: Nykaa's Credit Card Offers for Skincare


Negative balances are amounts the bank or card issuer owes to the cardholder, which is typically advantageous for the customer. No matter how you deal with the negative balance, either by asking for a refund or by using it, it’s important to remember that it is your money. Remember that your credit score is safe and sound when there is a negative balance on your credit card.

Latest Comments

Leave a Comment

200 Characters

Read Next

Flipkart No Cost EMI On Credit Cards: Guide To Avail The Deal


Benefits of Using Credit Card


Unlocking Savings: Exploring Discounts & Promo Codes with Yatra on Flights Bookings

Load More

Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.