How to handle Credit Card Refund After Account is Closed

I could use some guidance in how to handle this scenario:

  1. I am charged the annual fee on a credit card ($99).   That's the only charge on the credit card (airline card that I use only for checked baggage benefit), so the card balance is $99.
  2. I have a budget category called "Credit Card Fees".  But the fee hits close to the end of the month, I'm not actively in YNAB a few days, so the month rolls over with $0 budgeted to that category but -$99 in activity.
  3. The next month, I budget $99 to the credit card payment category directly.  So, $99 is owed, $99 is budgeted.
  4. I pay the $99 balance on the due date.
  5. Shortly after, I close the credit card (not traveling for awhile, no need for free baggage).  
  6. The credit card company refunds my $99 annual fee by issuing a credit on my account.  So my account now shows a balance of the company owing me $99.
  7. I call customer service, and they say will mail me a physical check for the $99, since the account is closed.
  8. A refund shows up on my credit card statement of $99, which YNAB automatically imports.

So, I'm left with the following:

  • There is a $99 refund on my card, which YNAB is interpreting as me having $99 available to pay for the credit card (against a $0 balance).
  • I will be receiving a check for $99, which will be deposited into my checking account.

How do I process these transactions into my budget?  Something about this just feels like there is a potential for double counting.  For example, if I were to move the $99 available to pay back into my TBB, and then deposit a check, that would seem to increase my TBB by $198, or twice the amount.  Or should I anticipate my credit card company to issue an offsetting charge for $99 when the actually mail the check, such that the credit card balance will net out to $0?  

Just don't want to create a situation I have to unwind a month from now when this all finally settles out.  Thanks!

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  • When you deposit the check, record it as a transfer from the credit card, and then move the $99 from available payment to TBB.  That will make YNAB reflect reality without being dependent on the credit card company to export updates on a closed card.

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    • Herah Thanks.  So, what should I do in the meantime with this balance refund that has been automatically imported?  I had been intuiting that I should accept this in with a category of TBB, then assume that the credit card company will process an offsetting transaction when it sends me the refund check, accept that transaction, which should bring all the numbers in my credit card budget item to be zero, then deposit the check and make it TBB?  I think that gets to the same place as what you're suggesting, but I haven't had this scenario come up before and don't know what entries to expect from my bank.  I'm concerned that if I just "guess" right now, it could result in weird budget behavior down the road.

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    • Steel Blue Yeti Change the Payee to be a transfer to checking. Technically, this injects $99 that you cannot yet spend into the budget, but that's only an issue if that's an appreciable portion of total on-budget cash. (In that case, leave that CC transaction as is until you receive the check, then change it to be a transfer.)

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    • dakinemaui Thanks.  So, once the check arrives, would I match the check to this already recorded transaction and be done with it, or would it require more steps?  

      And, yes, I can have $99 that's not truly available floating around in the budget for awhile.  I just don't want to be trying to figure out 6 months from now why something is off by $99.

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    • Steel Blue Yeti Depends on how long it takes the deposit to clear and whether you import or not. Import will only auto-match within a 10 day window, so outside of that you should Manually Match to the transfer version that's just sitting at the bottom (or top depending on how you sort) of the uncleared transaction list. (General tip: I like to hide previously reconciled transactions most of the time.)

      If you don't import, there's nothing special to do. Just clear the transferred inflow when it clears your bank during a normal reconciliation.

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  • Steel Blue Yeti said:
    I just don't want to be trying to figure out 6 months from now why something is off by $99

    No doubt! That's the sole purpose of the cleared status indicator. It keeps track of pending and cleared/posted transactions.

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  • I would think, that if there is a significant time lapse, delete the imported transaction on the card. Your TBB is accurate as you dont have that money to spend, so the $99.00 fee should stand. 

    Then once the check arrives, put it in checking and treat it as an inflow to the credit card fees account. This will make it so that you have 99.00 available in that account. You then put a -$99.00 in the budget column and it frees up the funds to the TBB amount. 

    Not sure if that makes things more complicated or not :) 

    I look at it from an accounting perspective - the expense happened, and until I have that money available to spend, it still happened. Then the check comes in and you net it off against that expense and assign that money elsewhere :) 

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    • anderso9 In short, "spend" that $99 and then refund it when it actually clears your checking account. I'd certainly agree this is a good approach if funds are tight.

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  • Steel Blue Yeti The fee was originally categorized to Credit Card Fees, is that correct? If that's the case, I'd handle it as a reimbursement instead of a transfer.

    You don't need to wait for the bank to import the adjustment, reconcile the credit card to zero now—removing those dollars from To be Budgeted. Then close the account in YNAB, which will prevent future imports too. When the check arrives in your bank account, you'd categorize it back to Credit Card Fees, to offset the original spending in your reports.
     

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