What happens if I have a positive balance on my credit card?

Understanding Credit Balances on Your Credit Card

A credit balance on your credit card indicates that you have overpaid your account or received a refund. This positive amount is not a debt owed, but rather funds that belong to you.

Causes of Credit Balances

Credit balances can arise from various situations, including:

• Overpayment: You may have accidentally paid more than the minimum payment due or made an extra payment.
• Refund: You may have returned an item purchased with your credit card, resulting in a refund.
• Dispute resolution: If you dispute a transaction and it is resolved in your favor, you may receive a credit to your account.

Using Credit Balances

The money in your credit balance can be used to offset future purchases. As you make purchases, the amount owed will be deducted from your credit balance until it reaches zero.

Benefits of Credit Balances

While a credit balance does not directly improve your credit score, it can:

• Reduce your interest charges: If you continue to make purchases on your credit card, having a credit balance can lower the amount of interest you pay since the balance will be applied to future charges first.
• Provide flexibility: A credit balance gives you the freedom to make purchases without having to worry about going into debt.
• Avoid overdraft fees: If your credit card is linked to your checking account, a credit balance can help prevent overdraft fees by covering any unauthorized withdrawals.

Accessing Your Credit Balance

You can check your credit balance online through your credit card issuer’s website or mobile app. You can also call customer service for assistance.

Important Note

While a credit balance is generally favorable, it is crucial to manage your credit wisely. Overpaying your credit card can result in unnecessary fees or interest charges if you do not use the credit within a reasonable timeframe.