If you have a negative balance on your credit card account. the Truth in Lending Act lays out how lenders should handle this situation. And it requires that they make a good faith effort to refund the money.
If you look at your credit card statement, it typically has a summary that will indicate the total amount you owe or your new balance. Reader Daron wonders, “What does a negative balance on my Mastercard account summary signify?”
What a negative balance on your credit card summary means
If you do see a negative balance on your credit card summary, there’s no reason to panic. In fact, it’s quite the opposite situation. It means that your card issuer owes you money after crediting your account, rather than you having to pay the issuer.
There are a variety of reasons this might have happened. For instance, you might have overpaid your last credit card bill by mistake. Maybe you typed in the wrong figures on your online payment or overpaid because of some other oversight. It could be that you returned a purchase and then were given credit for it. If you had already paid for that purchase, you will then have a credit balance.
Another occasion for a negative balance could be that you disputed a particular transaction and then were given credit for it after the dispute was resolved in your favor. And if you redeemed your rewards for a statement credit, that could result in a negative balance in case you paid off your statement in full without taking into account the adjustment for the rewards payment.
It could also happen that your issuer granted your request for a fee waiver after an uncharacteristic late payment. If you had already paid this fee, along with the rest of your balance, and then put in for the waiver, the amount refunded will show up as a credit balance.
Truth in Lending Act protections
The Truth in Lending Act, implemented by Regulation Z, offers protections to consumers who use credit. This regulation also covers credit card lending. This law offers a guideline for lenders on how to deal with a negative balance situation, or credit balance, in a consumer’s account.
The lender could:
- Refund your credit balance to you immediately
- Give you a refund even before you put in a request for it
- Get the money to you after you put in an oral or online request for it
If the money remains on your account for more than six months, the lender is obliged to make a good faith effort to refund you the money. This includes putting in an effort to trace you using your last known telephone number and address. If this effort is not successful, the law doesn’t impose any further obligation on the lender.
In case the lender had made an earlier unsuccessful effort to refund you the money before six months are up, it does not need to engage in this effort again after the mandated six-month time frame.
How to deal with a negative balance
If you are not sure what occasioned the negative balance, you could ask the issuer for an explanation.
If the negative balance is on a card you regularly use, the situation will be automatically resolved the next time you make a purchase that equals or exceeds the amount. If your negative balance is $50, for instance, and you get a haircut that costs $52, you will be responsible for only $2, with the $50 credit balance taking care of the rest of the bill.
If you don’t use this card much, you could proactively contact the card’s customer service and ask for a refund of the money.
Daron, a negative balance on your credit card statement’s account summary is no occasion for concern. It actually represents a cash inflow for you. If it’s a card you use regularly, that credit will be applied to future purchases. Otherwise, you could contact the issuer and ask for a refund of the credit.
Contact me at firstname.lastname@example.org with your credit card-related questions.