How to ask for a credit balance refund
Paying for purchases on credit cards enables you to score great rewards and sometimes pay off purchases over time with no interest by using a 0% APR credit card. However, if you pay for goods or services with a credit card and then get refunded for them, the money is generally put back on your card.
Usually, this isn’t a problem because the refund you get just reduces the balance you owe. Sometimes, however, a refund ends up coming after your balance has already been paid off — especially if you tend to pay your bill in full every month. When this happens, you could end up with a negative balance on your credit card. And this is happening to more Americans than ever as coronavirus leads to the cancellation of vacations, events, or other big-ticket items.
If you find yourself in this situation, it’s important to understand what to do to get back the money your card issuer owes you.
What is a negative balance on a credit card and how does it occur?
A negative balance can appear on your credit card any time you get a refund for more than you currently owe.
Say you paid $5,000 for a vacation a few months ago and paid off your credit card in full last month. Then, afterward, perhaps you made a few small charges totaling $500 when you get a $5,000 refund for the vacation you can’t take. After the refund is processed, you’ll have a negative balance of $4,500. Your card issuer will owe you money.
You could also end up with a negative balance if you make an overpayment — paying more than is due when your credit card statements come — or if you’re refunded fees after you’ve already paid off your bill.
The good news is, a negative balance won’t affect your credit or your ability to apply for new cards. If you’re looking to apply for a new credit card, make sure you check out Credible’s interactive tools to find the right card for you.
If you have a negative balance, creditors will simply report that you have a $0 balance. But your money will be tied up. And if you aren’t using your credit card heavily or you got a big refund, it could take a long time before you charge enough to get back to $0.
Why should you request a credit balance refund?
Requesting a credit balance refund makes sense if you don’t want your money tied up on your card.
You may need the money for things that you can’t put on your card, such as rent. Or you may have other cards you’d prefer to use and don’t want to be forced to spend with one just to get back to $0. This could happen if you put an expensive trip on a travel card that you use only or trips because it doesn’t provide good rewards for other spending. You may not be using that card for a long time if you aren’t traveling due to coronavirus so having your money tied up on it for months wouldn’t make sense…….Read More>>