Rewards points & credit card payments

I can't tell if I'm confused, or if YNAB is!  Here's the sitch...

So I keep my credit card Rewards balances as Tracked Assets.  I don't know the YNAB stance on tracking these, but I like to have them as a little "surprise free money" every couple of months when I remember to go check on them.  I have had some high spending lately and decided to use some of that to pay down a balance.

My CC's balance is $344.35.  It is 100% budgeted (so will be paid next month by money I have now).

I opted for $200 from my Rewards Balance.  So I went to the Rewards account, added a transaction as a Payment Transfer to my CC's account.  It all looked good.  It didn't ask me for a Category, and I watched my running balance on my CC (on the left sidebar) go down to $144.35.

Then I go over to my CC's ledger.  It shows the mirror side of that new transaction.  It shows $144.35 under Payment.  This makes sense to me because that's all I'll really have to pay.  However, it is demanding that I set a Category.  I think this is a bug: it knows it's a Transfer, but wants a Category??  If it's a bug, we can stop here.  If not...since I'm obsessive about keeping the "attention needed" dot away, I decide to go find a Category.  I mark it as To Be Budgeted since I can't choose my CC outright.  This is where it gets funky: 1) To Be Budgeted does not change, and b) my Payment for the CC goes back up to $344.35.  Wait, what?  The running balance on the sidebar still shows $144.35.  I'm not planning to pay an extra $200, so that seems like it'll remain there forever.  I tried "accelerating" the payment from my bank by setting next month's payment (remaining $144.35) to yesterday.  That dropped the Payment to exactly $200, showing I have an extra $200 budgeted to "overpay" on my CC.  Still funky!

I'm wondering if I should enter the extra in a different way, so that it get treated as if I'd found $200 on the street.  Magic money in, added to Budget, Budgeted.  I just feel like there is a simpler set of steps.

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  • Any transfer from a Tracking account to a Budget account requires a category because it is funds entering the budget. Make it Inflow: TBB. Then you'll have to go to the budget page and manually adjust the amount allocated to the credit card payment category in order to actually get the money into TBB.

    Reply Like 3
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 3 mths ago
      • 1
      • Reported - view

      What jenmas wrote. And you'd do the exact same thing without a transfer if you weren't tracking your reward balances off-budget.

      Reply Like 1
  • In the future, entering the transfer from the budget side account will give you access to the category field.

    Reply Like 2
  • I think TBB should be relabeled "Debt Management" in all credit accounts. That's a better description of how it actually behaves

    You might make a feature request to YNAB if you're so inclined.

    Reply Like
  • Thank you all!  The "it's money entering the budget" hit me last night after more pondering.  I see what you're saying: that I essentially got a free $200 (yay!), so what I had budgeted is still covered & will be paid on the CC, but I get $200 extra for spending elsewhere.  I'll keep an eye on the running balance of the CC to ensure YNAB doesn't start thinking I have a $200 credit.

    It sounds like it is a bug to not require a category when moving from a non-budget to a budget account, if you're doing it from the non-budget side.

    //Edit: Maybe the bug is also that my TBB didn't get +$200.  It went straight to my CC.  So in my Budget, it looks like I have to budget -$200 on the CC to align the running balance, Payment, and Amount available all to $144.35.  Now my TBB shows $200 more to budget elsewhere.  That's a step I hope the tool could automate.

    Reply Like 1
      • satcook
      • satcook
      • 3 mths ago
      • Reported - view

      Silver Barnacle you did have to use a category when you loved the money. ‘To be budgeted’ is the category you used

       

      use the move money tool to move $200 elsewhere since you no longer need it to pay off the card. 

      Reply Like
    • Hi Silver Barnacle ! Certain inflows to credit cards (like cash back rewards and statement credits) can seem confusing, but we recommend you categorize them to your credit card as Inflow: To be Budgeted, and move money just as you have. Let's look briefly at why:

      When you categorize an inflow to a credit card as Inflow: To be Budgeted that inflow will only reduce the balance of the credit card. This accurately reflects what happens in your account as well. The credit is applied, and your account balance is reduced.

      Once your account balance is reduced, be sure to double check the Credit Card Payment category for that particular account. You might find that you now have more money than you need in the Payment column. If you find this is the case, you can safely move money from that category to any other category.

      I hope that helps! Let me know if you still have questions. I’m happy to help!

      Reply Like 1
    • satcook Actually, I did not.  But now I see why; in Non-Tracked assets, there is no Category column.  Hence it didn't ask me for one until I went over to the Tracked asset and looked at the inflow side of the transfer.

      Since it's not visible from one side, no bug.

      Reply Like
    • Nicole Hi Nicole, thank you!  That is exactly what I discovered to be the necessary steps.  They just seemed a bit confusing on first encounter.  Additionally, I was surprised by the request for a Category because I did a "push" transfer from the non-Tracked cash back account.  There is no Category column for non-Tracked accounts, which is totally logical.  Hence I had no visibility of the need for a Category till I hopped to my CC's ledger later.

      Would there be a downside to YNAB automatically adjusting the Credit Card Payment category to move that money to TBB?  I mean, I marked it as TBB in the transfer but it didn't show up there.  It went straight to "available" in Payments.

      Reply Like
    • Silver Barnacle The behavior for the tracking account is correct there! With a transfer, the other side of the transaction is created for you. In the web app, you'd see a dot next to your budget account to indicate that a transaction needs your attention (in this case, a category of Inflow: To be Budgeted).

      As recommended from above, you can initiate the transfer from the budget account—and won't need that extra step!

      When you receive an inflow to your credit card, that reduces your balance owed. You won't see those dollars appear in To be Budgeted, unless it created a positive balance on your card. The money you're moving is dollars you've set aside in the Credit Card Payment category, that can now be used elsewhere—because they're no longer needed for your future payment.

      Reply Like
    • Nicole 

      Thanks for the clarification!

      Nicole said:
      The money you're moving is dollars you've set aside in the Credit Card Payment category, that can now be used elsewhere

      I do get where it comes from.  The thing is, I never purposefully set aside dollars in the CC Payment category.  YNAB does that for me whenever I make a purchase with a credit card.  It's a nice step to simplify CC debt tracking.  So if it can auto-allocate to Payments for charges, my engineering brain says it should be possible to do the reverse & auto-allocate from Payments back to TBB for statement credits.

      Side note: I just realized this may explain why I have had unexplained "excess" money in my Payments in the past...I may have gotten statement credits and not known they didn't go straight to TBB.  It definitely hasn't hurt me to realize I have some "bonus" cash whenever I reconcile this with my bill!

      Reply Like
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • Reported - view

      Silver Barnacle It can't auto-allocate from Payments if Payments is empty (e.g., right after making a payment). The resulting negative category would surely confuse people. The inconsistency of only doing it if there's money would confuse others. Not to mention the confusion when there's money but not enough.

      If your card has paid-in-full status -- meaning the CC Payment category matches the entire account balance -- then feel free to switch to using a checking account type to represent your CC. Statement credits show up in TBB as you'd expect.

      (Hint, make a "payment" from a new checking account to switch, and close the existing CC account. That new account balance will be negative.)

      Reply Like
    • dakinemaui 

      dakinemaui said:
      It can't auto-allocate from Payments if Payments is empty

       I think I see what you're saying...if the statement credit came AFTER paying the month's bill instead of before?  But that means you effectively overpaid, so there *is* money.  The statement credit creates money, putting your CC at positive.  This seems like a uniquely identifiable case where YNAB could auto-subtract that amount & put in TBB where it belongs (just like any other inflow).  If it didn't, that's where I imagine the confusing part would be: realizing (who knows when) that you've got extra cash in the Payments category instead of TBB. 

      This would have happened to me if I had simply entered the statement credit and moved on instead of doing a couple more maintenance tasks that led me to notice the missing extra dollars in TBB.  And this *has* happened to me for smaller dollar amounts due to product returns.  It was just that I never understood the correlation between the running CC value on the left sidebar, Payments in the ledger, and the Available amount in Budget.  I was unknowingly carrying that extra cash around in my CC's budgeted payments because I'd always assumed statement credits went straight to TBB when I *chose* "TBB" in the Payment category.  Is that not a reasonable assumption?

      People have enough trouble grasping how CCs are a "special case" in YNAB...this just seems to make it more difficult.  Every inflow gets a category, and that money gets added to that category...except CC credits.  Setting those as TBB doesn't add money to TBB...it adds money to the CC's Budget.  If I wanted to put it in my CC's budget, I'd try to choose that CC as the payment category...of course, you can't, because they're "ghost" categories that only show in Budget in order to handle payoffs.

      Reply Like
  • Silver Barnacle said:
    My CC's balance is $344.35.  It is 100% budgeted (so will be paid next month by money I have now).

    If you always pay your CC in full,  you might prefer the workaround of setting up your CC as a checking account in YNAB. I find that it vastly simplifies my budget and avoids these odd/inconsistent behaviors where TBB and payment balances don't behave in ways I'd expect or prefer.

    With a CC setup as a checking account, there's no "Payment" category to manage anymore. When I'm rewarded with a statement credit, I record it as an "Inflow: TBB" transaction in my CC account  and that's it. The money appears in the TBB balance and is ready to be distributed in my budget just like any other inflow (e.g. paycheck.)

    IMO the YNAB CC account type is only useful if you're managing debt -- i.e. the balance of your CC is not always 100% budgeted. In that context, it's helpful for YNAB to track exactly how much money you can afford to send to your card issuer at any given moment, and some of these odd/inconsistent behaviors make a lot more sense.

    Reply Like 2
    • bret Whoa!  Thanks, that's an excellent suggestion.  I only just learned its CC debt tracking abilities; I had done it manually by setting a "pay off by" goal (I only ever hold debt on 0% financing specials).

      I'm seriously considering changing the account type.  Some questions...

      1. Does auto-importing from my provider still work?
      2. What is your starting balance?  $0, and let it run negative?
      3. Are there other typically-automated steps that YNAB doesn't do because it's not a CC account?
      Reply Like
      • bret
      • bret
      • 3 mths ago
      • 2
      • Reported - view

      Silver Barnacle 

      1. Yes; I have 3 different CC accounts that I've setup in YNAB as checking, and direct import works flawlessly with each of them.

      2. It will be like any other checking account except the balance is always negative (or $0, if you happen to payoff the entire outstanding balance, but there's rarely a good reason to do that.) 

      3. You won't have an automatically managed "Payment" category anymore.

      The key thing to understand about this workaround is that the entire balance of your credit card is implicitly covered by your budget at all times. For example, if you have $1000 in your checking and a -$200 outstanding balance on your credit card, YNAB will say you have $800.

      Contrast that with the normal CC behavior, where YNAB would say you have $1000 (and encourage you to budget $200 toward your "Payment", but you're not required to do so).

      Or to put it another way, the "Payment" category provides a way to represent CC debt inside your budget, which is useful to anyone who leverages credit cards as debt instruments.  But if you never (ever!) intend to carry CC debt -- if your only reason for using them is to earn rewards, improve your credit score, and enjoy greater purchase protections -- then you can avoid the headaches caused by that category and simplify your budget by pretending your CC is just another checking account.

      Reply Like 2
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • 1
      • Reported - view

      Silver Barnacle #2 -- starting balance of $0. Then make a payment to the old CC account. This reduces the CC Payment category to $0 and sets the new CC account to a negative balance.

      #3 -- it's actually the reverse. Using a checking account automates things that a credit account type does not. Here's a few:

      • Transactions categorized as TBB actually show up in TBB
      • Transfers to a Gift Card account (i.e., when purchasing a new GC) don't cause new debt. (You're exchanging cash for a GC, only via the CC as an intermediary/temporary mechanism.)
      • Immediate Reimbursement situations (e.g., you put a joint lunch on your card for the points and pick up your friend's cash) don't cause new debt.
      • Overspending WILL be taken out of your cash. You should be doing this (Rule 3, right), but YNAB will if you won't. This makes all spending consistent (credit or cash, it's all "just spending").

      The one thing a credit account "automates" that you won't miss is the silent accumulation of new debt if you happen to miss the yellow overspending warnings. (Easy to miss under a collapsed category or in a sea of underfunded Goals that are also yellow.) This workflow is optimized for the new user who relies on credit rather than having cash backing their purchases. Hopefully, such a user quickly leaves such habits behind, but then unfortunately has to deal with a less-than-optimized workflow forever.

      Reply Like 1
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • 2
      • Reported - view

      bret said:
      For example, if you have $1000 in your checking and a -$200 outstanding balance on your credit card, YNAB will say you have $800.

      To clarify slightly, the checking account accurately says you have $1000, the credit card account accurately says you have -$200, but the total funds in the budget will be $800. Again, because the entirety of the CC balance is implicitly reserved, so all other purposes/categories must total the remainder. 

      Reply Like 2
      • bret
      • bret
      • 3 mths ago
      • 1
      • Reported - view

      dakinemaui 

      Or as I'm fond of saying anytime this subject comes up: YNAB has separate views for "Accounts" and "Budget" and they have different purposes!

      A lot of folks 🤯 when I describe this workaround and I'm not sure why. It's been ages since I looked at the standard YNAB CC functionality, but aren't account balances displayed the same way? (With a negative sign and colored red?) If so, the only real difference here is the absence of an auto-managed "Payment" category, which some PIF users already ignore/hide (at their peril...)

      Reply Like 1
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • 2
      • Reported - view

      bret Correct, but for some reason a negative checking account baffles some people, so I've learned to be a little more verbose.

      Reply Like 2
    • dakinemaui That's what baffled me for a moment, but it makes sense (goal is to always hit $0).  The other way -- setting your credit limit as the balance and spending against it -- would be super dangerous!

      Reply Like 1
  • Silver Barnacle said:
    The statement credit creates money, putting your CC at positive. 

    Yes, it's stupid for YNAB to suggest that you overpay your card balance, and it's tedious to manually correct that each time you record a statement credit. That's one of the reasons I chose to setup my CCs as checking accounts.

    However, this problem only affects "paid-in-full" credit card users. If you are carrying debt on the CC, then YNAB's behavior makes a lot more sense.

    For better or worse, a lot of YNAB workflows, especially the CC mechanics, are optimized for users in financial distress (e.g. managing debts, paycheck-to-paycheck, etc.).

    Reply Like
    • bret  I definitely understand that.  I kept resisting muddying things by making comments about how transparently putting that money back into Payments instead of TBB would most likely help those in financial distress (by not giving them the overt choice to spend it elsewhere & therefore stay in debt longer).  So I really hope they understand the Payment numbers on the Budget page to recognize they have extra they can use to pay off the debt!

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  • I always have my rewards $$ direct-deposited into my checking account and enter it as TBB. Then it's easy to do whatever I want with it and it doesn't interfere with credit card balances.

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    • JoeDid Good thought.  I haven't seen that option on my CCs' sites.  Some CCs (like Citi) are tricky/shady and don't outright state that using Points for different things will change their exchange rate.  Citi's is 100% for gift cards, ~75% for statement credits, and 50% for cash (and I assume direct deposit if available).  So I have to adjust my reimbursements appropriately.  Discover gave 100% for statement credit...I didn't even look to see how much they offered for a check.

      Reply Like
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • Reported - view

      Silver Barnacle Certainly worth reading the fine print. FWIW, my Citi card is 100% for a statement credit.

      Reply Like
    • dakinemaui Really? Must be the type, and I never spotted such things in the fine print (their online FAQ is useless for such technical things).  My Rewards+ card has a goofy mechanism for statement credits.  Instead of just applying $X to my statement, I have to click checkboxes for the specific charges I want covered.  Skimming through, charges like $9 would cost 950 points.  Some bigger charges, like $73, took ~9000 points (equivalent to $90).  It seems to vary depending on the category of the store.  In the words of a key childhood role model: Homie don't play that :P

      Reply Like 1
      • JoeDid
      • Remember: It is To Laugh
      • Purple_rain
      • 3 mths ago
      • 1
      • Reported - view

      Silver Barnacle I guess I'm lucky then. These are all paid out as cash at 100%, with the exception of one (LLBean, which gives out "Bean Bucks" to be used there.) If I couldn't get 100% as cash, I would take the statement credit, given that that would be at 100%.

      Reply Like 1
  • Silver Barnacle said:
    The statement credit creates money, putting your CC at positive.  This seems like a uniquely identifiable case where YNAB could auto-subtract that amount & put in TBB

    Your statement is only true for a card with paid in full (PIF) status AND who actually pay in full (less common). However, it already does as you describe (shows up in TBB) for them.

    The vast majority are not PIF users and should ALWAYS be paying the category to $0. So timing alone will dictate whether enough cash is available, which leads to confusion if things were automated only some of the time.

    Reply Like 1
    • dakinemaui I believe we are in absolute agreement, however I think the disconnect is that "some of the time" is subjective.  To me, it is currently automated only some of the time and causing confusion and/or extra work.  That's because my frame of reference is basically "inflows go to [category], outflows take from [category]".  If I choose TBB, I expect my TBB to reflect that when I go over to Budget.  Why shouldn't it?  If I wanted it to go into a specific category, I'd instruct it to do so.

      E.g. If I get a statement credit on a grocery purchase, I typically set Category as Grocery.  My Available Funds in Grocery go up.  Makes sense.  However, if I choose TBB, it goes to the CC's balance, not TBB.  That is non-intuitive.  Not useless, as I agree it helps transparently recycle the budgeted money to pay off CC debt...but it's still non-intuitive. 

      Inflows on CCs act differently from all other inflows.  I totally get that because payments need to go to the debt first.  But as an engineer, grouping non-payment (identifiable by the Payee field) inflows the same as payments simply appeared to be an oversight.  I can understand that it might be by design to help pay off debt.

      Reply Like 1
      • dakinemaui
      • dakinemaui
      • 3 mths ago
      • 2
      • Reported - view

      Silver Barnacle Yes, totally. The issue is that YNAB has taken the literal approach that the budget is the plan for your cash. I desire a higher level of abstraction: the budget should be a plan for my spending.

      This is the reason YNAB cannot handle being in overdraft with a chronically negative checking account. (It's not uncommon for some to be in this situation for years). Paraphrasing their words, "You can't budget if you don't have money." Reluctantly, Support might tell you how to do it, but it's not in their documentation. It's trivial to work around, but by design, the budget is no longer solely comprised of cash. It's at a higher level of abstraction.

      The behavior with TBB is similar. While unquestionably accurate (debt is reduced by a statement credit) many people want a plan/budget that abstracts that detail away.

      Reply Like 2
    • dakinemaui Magnificent.  Yes, I think I constantly am pushing it to be a plan for my spending.  I've had to rein that in by not budgeting beyond my currently available funds.  It's the smart way to go, for sure, because I am still far far away from being that abundant in moneys.

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