Credit card

Negative Credit Card Balance and Your Credit Score

Understanding credit cards will give you insights into how it works and how your issuer handles your finance and account. Credit cards come with credit scores, credit balance, credit limits, etc.; these all sum up what a credit card comprises. Your credit card balance is essential when it comes to filing your credit report as it influences your credit score.

To fully understand credit card balance, you must bear in mind that it is more than the money you owe your credit card issuer.  It influences your credit score and your chances of getting approval for a new credit card, loans, or mortgages. Your credit card balance is crucial because it is reported to the credit bureaus for filing. Note that as your credit card balance fluctuates, so will your credit score.

What is a Negative Credit Card Balance?

A negative credit card balance is not something to fret about. It simply means that your credit card issuer owes you instead of the other way round. This can happen due to several reasons, which does not necessarily mean you have done something wrong.

Generally, a negative credit card balance happens when you overpay your credit card payment or get a refund on transactions. If you find yourself in a situation like this, your credit card balance will show a negative figure.

Most people get curious and anxious when they see a negative balance on their credit cards. Some also wonder if it affects their credit score. Let’s take a look at the reasons why your credit card balance is showing a negative amount.

Credit Scores

Credit scores are a numeric grading system that is used to show your creditworthiness. It indicates your financial behaviour and is significantly influenced by our credit card utilization, among many other factors.

There are several ways to get a great credit score in Canada, most of which are free. The credit bureaus base your credit score on the details in your credit history, credit cards, loans, and any debt account linked to your credit report.

The bureaus then use your credit limit, account age, payment history, account balance listed on your credit report to calculate your credit score. Each of these factors impacts your credit score differently.

Note that if you frequently max out your credit cards, your credit score might be affected. Your credit utilization is essential to your score; hence the more credit you utilize, the more potential lenders and issuer will perceive you as a risk.

Getting a Negative Credit Balance

Below are some of the reasons why you have a negative credit card balance:

  • Overpaid Credit Card Payment

This is one of the most common ways to get a negative balance. Once you pay more than you owe on your credit card statement, your balance will read negative. If you initiated this payment via your issuer’s website, you’d be unable to make more payments towards your credit card.

This is because your issuer will restrict further payment from you. Your credit card issuer will accept the overpayment and send the excess on your statement as a negative balance.

  • Cancelled Fees

In a case where your credit card issuer waives a late payment or other fees from your credit card, and you’ve paid off a balance that includes the waived payment, a negative balance will show on your statement.

  • Rewards and Benefits Issued as statement Credits.

You can get a negative balance on your cashback credit cards. This applies to cashback credit cards that you pay once a year. These cashback rewards are applied as statement credits which convert to credit in your account.

Once the rewards are converted, and the sum is larger than what you owe on your account, you’ll receive a negative balance. If you cash out too many rewards on your credit card, it will make your statement read negative.

  • Refund on Purchase

If you get a refund from a purchase you made with your credit card, and you’ve paid off the balance, it will create a negative balance on your statement. This purchase can be flight tickets, accommodations, etc.

However, If you bought and returned the item within the same statement cycle, you won’t get a negative balance as the payment will offset the initial payment.

  • Reversed payment

If you were fraudulently charged for a service and the money was refunded, the refusal is applied as an account credit. This will reflect a negative balance on your account. Usually, this happens when you pay off your balance in full without closely checking your statement. It is advisable to pay attention to your statement when making payment, as this will help you correct or dispute any fraudulent charges on your card.

  • Cash Advance

A cash advance is another way to get a negative balance. You can request a cash advance from your issuer if you need the extra fund to offset a payment. Having a negative balance due to cash advances will help you avoid high-interest rates, and any funds you withdraw will be from your negative balance. Bear in mind that interest on cash advances starts accruing immediately you take them.

Negative Credit Card Balance and Your Credit Score

A negative credit card balance does not reflect in your payment history; hence your issuer won’t include it in your report to be sent to the credit bureaus – Experian, Transunion and Equifax.

Also, a negative balance will not be visible on your credit reports; a prospective lender will not know you have a negative balance. Since credit score utilizes the financial data on your credit report to create a score, negative balances are not calculated into scores.

Note that a negative credit card balance shows your credit utilization – that is, the percentage of available credit you’re using compared to your credit limit. Your credit utilization of one of the most crucial credit scoring factors used by Canada’s credit bureaus.

The lower your credit balance, the better your credit utilization. Hence a negative balance is to your advantage since it does not influence your score. Additionally, a negative balance does not affect your credit card limit.

You can request a credit limit increment from your issuer as it would simplify the process. With a significant credit limit, you don’t have to worry about making large purchases or using up your balance.

Processing a Negative Balance Payment

There are a few options you can use to resolve a negative balance on your credit card. Some of the options include:

  • Leave the Balance

Since a negative balance does not affect your credit score and limit, you can let it be for a while before deciding what to do with it. You do not necessarily have to do anything about it immediately.

You can decide to leave a negative balance on your credit card for a few months. You can see it as saving or extra cash on your credit card. Bear in mind that if you leave a negative balance on your credit card for over six months, your card issuer will have to refund you the money as required by the law. You can expect to get your funds via mail.

  • Make Purchases

You can use your negative balance to make additional purchases. This might be the easiest way out, especially if the negative balance is small. Be vigilant not to overspend, add extra credit card debts, or miss a payment when using your negative balance, as this can damage your credit score.

If you’re familiar with how you spend using your credit card, you can use this option. However, if you don’t utilize your credit cards often, you might want to use other options.

  • Request a Refund

You can request your lender to turn a negative balance on your credit card into a balance refund. This option gives you control over the money, and you can do as you wish with it. You can decide to put it in a cash savings account or invest it.

You can request a refund of a negative balance by contacting your issuer’s customer service via call. Most credit card issuers in Canada send refunds through a check, money order or direct deposit to your bank account.

The mode and duration of your refund will take depends on the terms and conditions of your cardholder agreement. Generally, you should get your refund and access to your funds with a few business days unless your issuer has reservations about negative balances.


A negative credit card balance is not a bad thing, and you have not committed any crime. In fact, in some cases, it’s a good thing! If you have a negative balance on your credit card statement, it may be due to several factors, as mentioned above.

You can see a negative balance as some extra cash, and you can decide what to do with it. If you’re still unsure how to utilize a negative balance on your statement, you can contact your credit card issuer for assistance.

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