A negative balance showing on your credit card means that you are actually owed money by your credit card company in the United Arab Emirates.
This is often described in terms of the customer having paid an amount that was actually in excess of the total amount payable on their credit card.
The great majority of credit card firms in the UAE do not encourage customers to pay over the outstanding payable amount on their credit cards.
There are a number of reasons why a customer might find that they have a negative balance on their credit card.
One reason is that the customer has simply made a mistake in paying an excess amount to what was actually due to be paid.
Sometimes, the negative balance can be achieved simply by rounding off to a total amount that is more than what was due for payment when issuing a cheque.
The negative balance will likely be reported on the monthly credit card statement issued to customers, as well as on the customer’s online banking internet account main page.
However, there are other reasons as to why a negative balance might be achieved on a credit card account in the UAE.
These other reasons can include the likes of purchase returns via the seller, the credit card issuer charging expenses in error, the credit card company crediting bonus amounts, and refunds such as interest expenses, annual fees and credit card loans.
Refunds may also be issued by the credit card company in the event of any fraud having taken place.
If a credit card has a positive balance, then this means that there is a payable amount due on the card.
A positive balance will be displayed and no interest levied on the credit card account if the due amount is paid by the due date every month.
The account will also remain within a positive balance in the event that only the minimum due amount carries on being paid.
If there is a negative balance on a credit card account, it is up to the UAE credit card company to make a payment to the customer.
These negative balances can either be used by the customer to make adjustments to their credit purchases in the future or to make a request for the bank to refund the relevant amount to their account.
The credit card limit will remain the same and will not increase because of a negative balance on a credit card.
It just means that the customer is spending more than the limit of the credit card because they are overpaying to the company issuing the credit card.
A negative balance on a credit card account will, however, result in a reduction of the credit utilisation ratio of the account holder.
The ideal usage for credit cards is between 1% and 10% of the overall credit amount that is available.
A negative credit card is nothing to worry about for customers because it does not mean that they have done something wrong.