Your credit card balance includes purchases and interest. If you pay off your credit card every month, you'll have zero balance.
However, a few people end up with a negative balance on their credit cards. What does it signify if you have a negative credit card balance?
A negative card balance is predominantly positive because it indicates that you likely overpaid for something at some point.
Negative credit card balances are a temporary credit. When money is refunded to your account, a minus sign appears before the dollar amount.
If you have a $5,000 limit and a $170 statement credit, your limit will be $5,170. After spending the negative balance, your credit limit will be $5,000.
The short growth of a negative credit card balance might also reduce credit utilization, hence potentially improving your credit score.
When a refund or credit is sought, you'll have to pay for the item in full before it can be granted. The negative balance is a good sign that you're getting your money back.
Refunds are another explanation. A negative balance indicates that you returned an item or disputed a charge.
Earning a statement credit after paying your bill might also cause a negative balance. Cash back cards commonly issue statement credits.
If you close a credit card account with a negative balance, the issuer will almost certainly refund the money before closing the account officially.