Visa Gift Card Purchase Shows Up in Wrong Credit Card Account

I spent $29.31 at JCP and paid for it with a Visa Gift Card. When I enter it in YNAB, it shows overspending on my Ink Preferred card, but I didn't pay for it with that card. How can I fix this? 

Also, does anyone have tips for using Visa gift cards in YNAB? I feel like using these cards in YNAB is overly complicated for no reason. TIA!

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  • Is the spending category overspent/yellow? The GC is a cash purchase, so it will take priority over any transactions on the Ink CC in that same category. YNAB will short the CC Payment category to cover the cash spending. If that Payment category was $0 before the GC purchase, then it will be negative after the expense.

    Solution: cover the negative spending category.

    Like 1
  • I'm not sure what's overly complicated about GCs, since it's just recording transactions. Do you feel the same way about other payment methods?

    ETA: I have a number of gift cards, but I use a single account in ynab. This avoids setting up and closing down accounts. I just put an identifier in the memo field to differentiate a given card. When a card is empty, I clear all of its transactions, reconcile to a $0 balance, and then hide those reconciled transactions.

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  • Yes, the category is yellow. Thanks for the explanation. I still can’t wrap my mind around using visa gift cards on YNAB as an account to track category spending because I already spent the money on the gift card. I can’t allocate it to the credit card payment, so why would it take it from the amount set aside for the card payment? 
     

    I’ll probably just buy the gift card and treat that as a category transaction, rather than inputting line items for each purchase. 

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      • jenmas
      • jenmas
      • 1 yr ago
      • 3
      • Reported - view

      Alice Blue Commander There are a variety of reasons to use a gift card account. For example sometimes Target will have a sale on Target gift cards - 10%  off on up to $300. So I buy $300 worth of gift cards, but I only spend $270. And I spend those gift cards down over many months. So I do a split transaction on my Mastercard (no point in using the Red Card since I won't get the 5% off so I use the credit card that is 2% cash back). The split has a total outgoing of $270 and the two sub splits are $300 transfer to my Giftcard account (I have one account for all gift cards and I use the memo field to track individual balance) and a $30 to Inflow to Be Budgeted. And then I fiddle with the credit card payment category to get the available balance to match the credit card working balance.

      Sure, I spent the money on the gift card, but I now have the gift card which is a cash equivalent at Target to be spent over time on whatever I want. And I might spend some of the $300 on Birthday & Other Presents, some on Clothing, some on Groceries. But I don't know the breakdown on the day I buy the gift card(s). 

      Like 3
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 1 yr ago
      • 1
      • Reported - view

      I operate similar to jenmas with my gift cards.

      One difference: I create separate GC accounts for my frequently used vendor gift cards in order to use YNAB to track/display the balance available on those cards. I also use a generic GC account for the occasional cards that come my way, just renaming the account as I need to, closing the account when it's done, and re-opening the account if/when I get another card.

      I buy the GCs as a fundraiser, sometimes to support one of my nieces athletic team and other times to support the charitable goals of a church group.  I might buy $1,000 worth of grocery gift cards at a time.  I don't want $1,000 to be shown as spent on groceries this month, then nothing spent on groceries for the next five months. Additionally, I don't want to lose control of the spending guidance I get from my grocery budget category when I do start spending from the cards, so the GC account is a good option for me.  It's just another account I spend from. Obviously, having $1,000 tied up in gift cards that can only be used in one store could be problematic if my liquidity was tight, but I have 6 months of income squirreled away in my emergency funds, so it's not a problem.

      Like 1
      • WordTenor
      • I have the honor to be your obedient servant
      • WordTenor
      • 1 yr ago
      • 1
      • Reported - view

      Alice Blue Commander A third reason is that if you receive gift cards, you can use th money anywhere, provided you have enough other liquidity in your budget. My brother gave me a $20 Kroger card for Christmas. I still budgeted  my usual $200 for groceries, but only $180 of that came from checking; the other $20 came from my gift card account. This means that $20 in checking that normally would’ve bought groceries is now free to do something else, effectively turning the gift card into straight up cash. I budgeted the money to the category I use for buying fun things to decorate my house, which was a much nicer Christmas gift than groceries. 

      Like 1
    • jenmas said:
      no point in using the Red Card

      You might double-check this -- I received the 5% discount on my Red Card (debit) on the last Target GC purchase I made. It may have been a special thing, but it's worth asking.

      Like 1
  • Alice Blue Commander said:
    I still can’t wrap my mind around using visa gift cards on YNAB as an account to track category spending because I already spent the money on the gift card.

    Accounts in YNAB correspond to a location -- answering the question, "where are these dollars physically located?" When you transfer from checking to savings, you just change the location. (Perhaps it's more obvious if you have your savings at a different bank, but hopefully you get the gist.)

    When you "buy" a gift card, you haven't lost any money, you merely changed the location of that money. It's now physically located on that little plastic card, rather than wherever it was before.

    You're correct, though, you certainly can treat that money as spent immediately as a category transaction as you suggested if the "change of location" viewpoint doesn't quite sit right in your mind.

    Like 1
  • I usually buy gift cards at office supply stores to maximize credit card points. It's still throwing me off that it treats each line item like cash and it takes away from the money set aside for credit card payments if I overspent in the category. I've tried the way that everyone is talking about this month, and I pretty much double-dipped in categories because I bought Visa gift cards and spending on my credit card for normal purchases. While I'm all paid off, YNAB shows that I overspend when I charge things to the gift cards.

    Next month, I'm going to try it by assigning each gift card to a category. For example, if I buy a $200 Visa gift card, I'll categorize it under Groceries and only use it for that. I'll see how that works for me next month.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • 1
      • Reported - view

      Alice Blue Commander If you buy the gift card on a credit card, you've essentially given yourself a cash advance. The debt on your credit card has increased, but you also now have a gift card full of cash. As such, YNAB will put the new cash in your To Be Budgeted. You need to take that new TBB money and budget it back to the gift card, so you have money reserved to pay the CC for getting the gift card.

      This is separate from any overspending that might happen in the budget. Overspending occurs when you spend more money from a category than you have in the category. It doesn't matter how you paid for the purchases (other than cash and credit overspending have different handling, because cash is gone, but credit is debt).

      Like 1
  • Alice Blue Commander said:
    While I'm all paid off, YNAB shows that I overspend when I charge things to the gift cards.

    The issue isn't with the gift cards. YNAB would show that you overspent regardless of how you paid. The fundamental issue is the spending category didn't have enough money, if I've understood your situation correctly.

    You have a yellow category signifying debt without cash reserved to pay it off, but then you paid it off anyway?

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    • dakinemaui  ??? Now I'm super lost lol. I thought I had the cash to pay off my credit cards, so I did. Now, when I use the gift card to pay for something, and log it in gift card account, it shows that I overspent and that I'm over budget.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • 1
      • Reported - view

      Alice Blue Commander Having the cash and having the money reserved in your budget to make the payment are not the same thing.

      Like 1
    • nolesrule I understand that, and I'm not sure how to make all this mesh well in my budget. I have the "cash", as in, I have money left on my gift card, but I can't use what's on the gift card to pay off my credit card, so I didn't understand why it takes money from the credit card payment money when I buy something with the gift card. I understand it now because of the category spending, but it's not intuitive for me.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • 1
      • Reported - view

      Alice Blue Commander I agree, it's not intuitive. It does make sense once you understand it, but it's by no means intuitive.

      Like 1
      • Momofboysx3
      • I'm going to master budgeting, even if it kills me!
      • Steel_Blue_Mainframe.11
      • 1 yr ago
      • Reported - view

      nolesrule understatement for sure! 🙂

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  • Alice Blue Commander said:
    I usually buy gift cards at office supply stores to maximize credit card points

    Hmm, this could be a contributing cause as well. When you buy a GC with a credit card, YNAB increases TBB (seeing that as a cash-advance). You need to immediately budget those seemingly new funds to the CC Payment category. The CC Payment category won't have enough to pay off the entire debt if you don't.

    Like 1
    • dakinemaui  "You need to immediately budget those seemingly new funds to the CC Payment category." - What does that mean? How do I budget that to the CC payment category? I think this is where I messed up. When I bought the cards, I just transferred money from the credit card to the gift card account. 

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  • Alice Blue Commander said:
    How do I budget that to the CC payment category?

    Type a number into the budget/first column of the relevant credit card's category under the CC Payment group.

    You should not send the CC more than is in the Available/third column of this category. If you need to send more, then you need to increase the category (with a larger budget entry) first. (FWIW, all categories are like this -- the Available amount is used to help you make spending decisions.)

    Like 1
    • jenmas So if I buy a Visa gift card with a credit card, is this the process?

      1. Enter transaction (say, $200) as a transfer from credit card to gift card
      2. Enter $200 in the budgeted column for the credit card
      3. Enter the payment as a credit card payment for the card from my checking account
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    • Alice Blue Commander Correct. Feel free to combine #3 with any other budgeted purchases that have also increased the CC Payment category.

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  • nolesrule said:
    You need to take that new TBB money and budget it back to the gift card CC Payment category

     Fixed it for ya.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • 1
      • Reported - view

      dakinemaui I need to remember my afternoon caffeine.

      Like 1
  • Alice Blue Commander said:
    [1] I thought I had the cash to pay off my credit cards, so I did.
    [2] Now, when I use the gift card to pay for something [...] it shows that I overspent

     Reading this again, I'm pretty sure you have three issues going on. To summarize:

    1. Make sure the CC Payment category Available value is at least as much as the payment you want to send them. If it's not, then budget to sufficiently increase it.
    2. Make sure the spending category (e.g., clothing, eating out, etc.) has an Available amount at least as much as you intend to spend. If it goes negative, budget to take it to $0 after the fact.
    3. You need to budget to the CC Payment category after buying a gift card with a CC. As you point out (and I think we would all agree!), it's not very intuitive, but that's just the way they designed it.

    Of course, it's quite possible that issue #2 cascaded into #1, reducing the Available amount after you'd already made the payment. Definitely #3 contributes to #1, though.

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    • dakinemaui  Whew...at this point, I'm going to do a fresh start for November. I keep trying to fix it, and the whole budget goes bonkers. Thanks for your insight!

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 1 yr ago
      • 1
      • Reported - view

      Alice Blue Commander You might as well fix it. This scenario is not uncommon and you'll see it again, so you might as well figure out how to get it right.

      Like 1
    • nolesrule I've spent two days trying to fix it...I'm going to do a fresh start for November, and then enter the gift cards as category spending for the month, and see how that works for me. We usually spend the gift cards per category anyway, so that might be easier. 

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    • Alice Blue Commander You will immediately face it when you fresh start. You will need to budget enough to the CC Payment category to cover the entire account balance.

      The only other thing to remember is to cover negative category balances. Ideally, you would move money if necessary before the expense is incurred.

      FWIW, those two things are all you need to do to fix your current budget. However, I've heard a fresh start can feel liberating as well. Good luck with whichever you decide to do.

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    • dakinemaui So I looked at my current budget, and I did put enough in the CC payment back when I bought it. I’m going to do a fresh start so I can put buying gift cards as a category transaction versus as a transfer to a gift card “account” and try that out for the month. 

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