Have you been wondering, “why is my credit card balance negative?”
Some people are alarmed when they see that they have a negative credit card balance. This is not necessarily something that consumers have to worry about because it means that the bank owes them money. The negative balance becomes positive again after the consumer makes more charges on the credit card.
What Is a Negative Balance?
When a credit card statement comes in the mail, the balance listed is the amount of money that the consumer owes the credit card company. If the balance is negative, it will be listed with a minus sign in front of a number.
How Do Negative Balances Appear on Credit Card Statements?
Consumers can have a negative balance in one of the following ways:
Too Many Rewards Were Cashed Out
Some consumers make sure to pay their credit card bills in full each month. After they do this, their credit card issuers may issue a credit or a reward, and it will show up on the statement as a negative balance.
An Item Purchased with the Credit Card Was Returned.
When the consumer returns an item, the store credits the consumer’s account. In the event that the consumer makes a payment on the account, this can lead to a negative balance.
The Credit Card Bill Was Overpaid
The consumer may have paid more than the amount owed.
How Does a Negative Balance Affect One’s Credit?
A negative balance can mean any of the following things:
It Will Be Difficult to Close the Account
If a credit card account has a negative balance, it can be harder to close the account. It only means that the consumer will have to take a few extra steps to receive the money that is owed, so it shouldn’t be too difficult.
A Negative Balance Shows the World that the Account Is in Good Standing
A negative balance often means that the consumer pays the balance in full every month, and this results in a low credit utilization ratio. It also means that the consumer is making all of his payments on time, and this ensures that his credit scores are high or improving.
Negative Balances Do Not Hurt Credit Scores.
When consumers use their cards on a fairly frequent basis, any negative balances that show up on their statements do not last for long. Therefore, the negative balance never has a chance to affect the consumer’s credit utilization ratio. This means that the consumer’s credit scores aren’t affected by the negative balance.
Negative Balances Do Not Affect the Consumer’s Credit
The majority of the credit models consider a negative balance to be equal to “0,” so it does not impact the consumer’s credit negatively.
SoFi’s professionals point out that if you see a negative credit card balance, it’s not something you necessarily need to worry about. In that case, the experts at SoFi suggest that they request that their card issuers advance them a refund right away. Although negative balances are not necessarily bad for a consumer’s credit card accounts, they should still make sure that they check their balances on a regular basis.