Is it possible to close a credit card with a negative reward balance?

Negative Reward Balances on Credit Cards: What You Need to Know

Have you ever received a refund on a canceled flight, only to find that your credit card rewards balance went into the negative? This is a common occurrence for many credit card users, but it’s important to understand how negative reward balances happen and how they are treated by different issuers.

Returns and refunds are one of the main reasons why credit card rewards balances can go negative. Most credit card issuers deduct rewards for returns and refunds, which can lead to a negative balance. However, some merchants may offer a voucher instead of a refund, which can help avoid a negative balance on your account.

Additionally, rewards can be reversed if a cardholder misuses the rewards program or if a welcome offer is reversed by the issuer. For example, American Express has been known to reverse rewards earned from self-referrals or cancel welcome offers for cardholders who cancel or downgrade within a certain timeframe.

When it comes to how negative reward balances are treated across issuers, it varies. American Express will apply any points you earn to a negative balance until it becomes positive, while Capital One and Chase may deduct rewards earned from returns and refunds. Citi, on the other hand, may take action against cardholders who engage in fraud or misuse of their rewards program.

In conclusion, it’s essential to be aware of how returns and refunds can impact your credit card rewards balance. While some cardholders may not experience any negative effects from closing an account with a small negative balance, it’s generally recommended to bring your rewards balance back into the positive before closing your credit card account. Stay informed and proactive to avoid any potential issues with negative reward balances on your credit cards.