If you log in to your credit card account portal and see a negative balance, you may be alarmed. How did this happen? What does it mean?
Despite popular belief, a negative credit balance on your credit card account does not always indicate that you have less available credit or that you have committed a mistake. Actually, a negative credit card balance could just indicate that you owe money to your card issuer.
Your credit card balance, or the total amount you owe on that account at any given time, is usually increased by the amount you make purchases with your credit card. Generally speaking, paying off a credit card entails making the account balance zero dollars.
However, what happens if your credit card balance is negative? If it’s less than zero, it could indicate that you’ve paid more than you should have.
Additional occurrences that might result in a negative credit card balance are…
- A returned purchase
- A reimbursement of specific credit card costs (such as interest, late fees, annual fees, etc.) ).
- A refund due to an erroneous or fraudulent charge
- a statement credit that the card issuer offers as a part of a promotion or sign-up bonus
Greg Johnson, co-founder of Club Thrifty, explains that there are instances when you may be issued a statement credit, such as rewards card redemptions.
He warns, “You could end up with a negative balance should you make a payment toward your balance and then claim a statement credit.”
Johnson provides an example of how this could function, saying, “Let’s say your outstanding balance is $500.” After paying $400, you request a $300 statement credit for travel expenses. You would then end up with a balance of -$200. ”.
You have choices regarding how to deal with the ensuing negative balance in the majority of these circumstances.
We’ll get to that. Let’s first address some frequently asked questions about having a credit card with a negative balance.
Is my credit limit higher now that I have a negative balance?
According to Ashley Tufts-Freimuth, vice president of corporate affairs and communications at American Express, “overpaying does not mean you have a higher credit limit.”
“Your credit limit stays the same, but a cardholder can spend more than that limit (up to the overpayment amount) without going over their credit limit.” ”.
Tufts highlights overpayments, but if a refund or statement credit contributed to your negative balance, the same reasoning should hold true.
You can theoretically spend $10,100 on your credit card before going over your credit limit if your credit limit is $10,000 and your balance is $100. The majority of experts advise keeping your credit card usage below 20%, so consider this to be purely hypothetical. ).
When you apply for a credit card, the issuer usually sets your credit limit. Don’t treat a negative balance as a de facto credit limit increase; instead, ask the card issuer for an increase in your credit limit, which may or may not result in a hard credit inquiry.
How do I bring my credit card balance back up to $0?
There are two things you can do if your credit card account is negatively balance.
One option is to take no action and continue using your card as usual. Your credit balance will be deducted from your new purchases as you make them using your credit card, and it will progressively approach $0 until you are back at the starting point.
However, you have the option to ask that the credited amount be paid to you in a different way than a statement credit. You may also be able to pay with cash, check, money order, or credit deposit.
You should be aware that certain procedures must be followed by banks and creditors when handling negative balances. For instance, your creditor is required to manage the credit balance by if it exceeds one dollar by…
- Crediting your account for the amount of the credit balance
- granting your written request for a refund of any portion of the remaining credit balance within seven business days.
- attempting in good faith to reimburse the full amount to you via cash, check, money order, or deposit account credit for any portion of the credit balance that has remained in your account for longer than six months.
If the creditor is unable to locate you using your last-known address or phone number and does not know where you are now, it is not obligated to take any further action.
Experian corporate communications leader Sandra Bernardo advises you to remain aware of how your particular credit card issuer manages negative balances because, in addition to federal regulations, each issuer may have its own policies.
That’s one of the main reasons, according to her, that it’s critical to comprehend the terms of each creditor agreement.
“The contract should specify how overpayment amounts will be handled—both while the account is open and… if you decide to close the account,” Bernardo adds. ”.
Most of the time, a negative credit card balance is not a negative at all. In some cases, it’s actually more of a positive!.
It might indicate that there is some leeway in the amount you can charge to your card.
Your options are as follows: you could ask your card issuer for a refund or use the statement credit toward an upcoming purchase. If you’re unclear about how the negative balance came to be in the first place, it may be worthwhile to contact your credit card issuer for further information.
FAQ
Why is my available credit still negative after payment?
You’ve used your credit card to its maximum and then some if you have no available credit. There is no money available to you. You owe them. This is highly likely to occur, particularly if you’re only paying the required minimum.
Can I spend a negative available credit?
You can use your card as usual to make purchases up to the amount of the negative balance, depending on how far into the negative it is. Ask for a refund. You can request that your creditor pay you the money they owe you directly into your bank account, by check, cash, money order, or other means.
Why is my available balance in the negative?
When you make a debit card purchase or external withdrawal that exceeds your Available Balance, your Available Balance will go negative, but your Total Account Balance will remain intact because your Reserves are sufficiently funded.
Why did my available credit not go up after payment?
When you make payments on your account, an open-end credit card or other loan type modifies the amount of credit that is available within your credit limit. Nonetheless, the bank determines when to replenish the available credit, and under some conditions, a bank may postpone doing so.
Read More :
https://www.quora.com/I-made-a-payment-on-my-credit-card-and-the-available-credit-is-still-showing-negative-How-can-I-withdraw-the-money-on-my-available-credit-balance