Credit card balance vs amount in payment changes over time

I use two rewards credit cards for a large amount of spending, but account for all of the spending.  Can someone explain why my CC balance and my "payment balance" drift apart over time?  I realize there is a float time, but shouldnt the two always be at least the same as I am accounting for all purchases with budgeted categories?  I pay for full statement balance each month.  Is that whats doing it?  The fact that I am not paying it to 0 each month?  From a cash flow perspective, I would rather use the float no?

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  • jamorgan3777 said:
    I am accounting for all purchases with budgeted categories

    They diverge because you are doing something OTHER than budgeted purchases.

    For your reference, here are the reasons I've found that the credit card account & payment category balances diverge (paid in full cards):

    * starting balance on a paid-in-full card - category is lower

    * overspending - category is lower

    * uncategorized transactions - category is lower

    * outgoing transfers to other on-budget accounts (e.g., gift card account, mixed funding splits) - category is lower

    * taking the account balance positive - category is lower and should be $0 in this case

    * purchase/cash-back rewards (should be categorized to TBB) - category is higher

    * categorizing item returns as TBB (should use the original spending category instead) - category is higher

    * reconciliation adjustment - category is lower for an outflow adjustment, higher for an inflow adjustment

    * occasionally a return/inflow to a category that has transactions from more than one card - a bug will sometimes impact two payment categories: one is higher and one is lower

    * erroneous budget entry - accidents or misunderstandings occasionally happen

    To correct the problem, budget whatever is needed to make them agree. Some of them can also be fixed other ways (e.g., overspending).

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  • jamorgan3777 said:
    From a cash flow perspective, I would rather use the float no?

    Yes, there are several advantages to paying only what they've requested. You should still have the Payment category Available cover the entire debt (account balance) for paid-in-full status within the budget.

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  • Thanks much for your instights.  I am pretty sure though that I am not doing anything you post in your first post.  

    * starting balance on a paid-in-full card - category is lower - Occasionally I will pay off full amount and we will be fine for a couple of months then things start to drift

    * overspending - category is lower - I always clear overspent categories with TBB dollars, but this might be it.  I have to go back and check.  

    * uncategorized transactions - category is lower - I categorize everything

    * outgoing transfers to other on-budget accounts (e.g., gift card account, mixed funding splits) - category is lower - dont have these

    * taking the account balance positive - category is lower and should be $0 in this case - dont have this

    * purchase/cash-back rewards (should be categorized to TBB) - category is higher - I put rewards in TBB

    * categorizing item returns as TBB (should use the original spending category instead) - category is higher - I always try to put refunds in their original category

    * reconciliation adjustment - category is lower for an outflow adjustment, higher for an inflow adjustment

    * occasionally a return/inflow to a category that has transactions from more than one card - a bug will sometimes impact two payment categories: one is higher and one is lower

    * erroneous budget entry - accidents or misunderstandings occasionally happen

    To correct the problem, budget whatever is needed to make them agree. Some of them can also be fixed other ways (e.g., overspending).

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  • jamorgan3777 said:
    purchase/cash-back rewards (should be categorized to TBB) - category is higher - I put rewards in TBB

    Even if you categorize the cashback as TBB, you have to manipulate the credit card payment category to get the available amount in the category to match the working balance of the credit card account (except the category balance is positive and the account balance is negative). Example on Tuesday I cashed in $25 on my Amex. I categorized it as TBB and then went into the budget column of the Amex card payment category and entered -25 because other wise there was too much in the payment category.

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  • jamorgan3777 said:
    * overspending - category is lower - I always clear overspent categories with TBB dollars, but this might be it.  I have to go back and check.  

    You should have no remaining or left over TBB dollars.  When you get income, everything should be added into categories.  That's rule 1.  Give EVERY dollar a job.  If it's sitting in TBB it has no job.  It's Ok to have a category called something like "slush fund" or "things I forgot to budget for" or whatever that can be used as a source for paying unexpected expenses, but there shouldn't be money sitting in your TBB.

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  • jamorgan3777 said:
    I always clear overspent categories with TBB dollars

    Not it. (As an aside, ideally TBB would be $0 and overspending covered from lower priority categories. Better yet, move funds BEFORE overspending so it's not too late to skip the purchase if you can't identify a lower priority.)

    jamorgan3777 said:
    I put rewards in TBB

    Great. You also have to adjust the Payment category because the rewards only change the account.

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  • You haven't said whether your category is lower or higher than needed to pay the entire debt.

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    • dakinemaui Its always creeping lower.  I am pretty sure its due to the slight difference between budgeted and expended.  

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  • Hey there! It sounds like most, if not all, bases have been covered here. I just wanted to pop in and let you know that if it's really grinding your gears, we'd be more than happy to take a peek at things via Support Access, in case we're able to help you solve the mystery! In the web app, click the question mark near the bottom right of your budget and select Send a Message. 

    Ultimately, if you pay your card in full (even if it's offset by statement cycle), your Credit Card Payment category's available balance should always match your credit card's negative balance, so you'll want to move money until that's the case once again!

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  • Thanks Rachel for the offer but I think I found the issue.  As I go back through previous months I am finding more items that are overbudgeted by small amounts.  $10 here, $20 there as I was letting small overages float from month to month.  Those add up over time to a significant deviation in CC actual vs what is set aside.  When I go back and clear all of them, the totals line up.  

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      • Annieland
      • I was told there would be no math.
      • Annieland
      • 6 mths ago
      • 1
      • Reported - view

      jamorgan3777 I'm glad you found and fixed the issue.  I found out early on not covering overspent categories just creates headaches over time, aside from it not being best practices aligned with the YNAB rules.  You are essentially taking on new debt and that debt will have to be paid back to the CC at some point, which you must budget to the payment manually.  Otherwise, you are not a paid-in-full CC user. 

      Floating is a bit different from using the CC's grace period to your advantage.  While both will accrue no interest, floating has you taking on debt you won't have the money to pay back until more money (hopefully) arrives.  Utilizing the grace period just means you're only paying your statement balance by the due date.

      You've probably figured this out, but I just thought I'd mention it in case it clarifies it for anyone else.

      Like 1
      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • Reported - view

      Annieland In my view, "floating" is simply avoiding interest by paying the statement balance. The grace period alone allows one to be up to a month behind and still do that. Budgeting newly arrived income is required to be any further behind than that (i.e., an extreme case of riding the CC float). In both cases, one is taking advantage of the CC's grace period.

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    • Annieland Yes on all accounts.  Totally agree on float vs grace.  I was getting to a point where the "logical" outcome was that I needed to go buy stuff with the CC to have funds ready to pay off last months balance LOL.  

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      • Annieland
      • I was told there would be no math.
      • Annieland
      • 6 mths ago
      • Reported - view

      dakinemaui Ok, I thought a reference to "floating" in relation to CC's was shorthand for riding the CC float.  I'm envisioning some kind of 3-way venn diagram now :).

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      • dakinemaui
      • dakinemaui
      • 6 mths ago
      • Reported - view

      Annieland yes, floating or riding the CC float is the same thing in my book. When floating in water, you typically have to keep kicking so you don't sink. When floating with a credit card, you have to continue to make purchases to avoid interest.

      Certainly, a paid-in-full user is leveraging (or should, IMHO) the grace period as well to earn interest on the CC's money they have yet to request. I wouldn't really call that floating, though, since they can stop using the CC at any time. (I'd probably call this "fronting". Don't ya just love semantics? 😋 )

      Edit: reading my previous statement about what float means to me, I should have added a "when not a paid-in-user" qualifier.

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  • jamorgan3777 said:
    I am finding more items that are overbudgeted by small amounts

    Terminology-wise, that's "overspending". ("Overbudgeting" is allocating more money than you have, resulting in a negative TBB). Overspending is very common, do in no small part to the single-month budget view. Early in the month, it's typical for transactions to import (or during reconciliation you add transactions you missed) with dates in the previous month. You're no longer looking at that month's budget, so you don't see the yellow overspent warnings. Similarly, the warning in the CC account only considers the current month.

    It's a good idea to confirm no overspending a few days into the new month after you've reconciled the account. Paid-in-full cards are easy, as you just look at the account/category agreement in the current month. Non PIF card users will need to either check out the previous month's Activity detail or hunt through collapsed categories and scroll around looking for yellow.

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