Handling a Balance Transfer
Alright, so after scouring these forums and polling family/friends for advice, I decided to go ahead and open a balance transfer CC account (0% APR for 21 months). The card is on it's way, and when I get it, I'm going to immediately put in transfers for the balances of both my current credit cards (around 5k total).
My question is: How do I handle this with YNAB? I currently have those little orange bubbles beside my cards letting me know that I need to make some payments, but depending on how long it takes the balance transfer to go through, I may not have to make these planned payments (because my balance on the cards will be zero). Is it better to make my payments now and just transfer whats left? Or will YNAB understand what I'm doing when I put in the transactions for the budget transfer?
Sorry if this is a dumb question, I've just been having a lot of success using YNAB (2k+ of debt down in ~4 months!) and I want to make sure I'm doing everything right.
Thanks in advance!
Hi SiruhTheSantas !
Congratulations on your progress so far! :)
This isn't a dumb question at all! When you receive your new card, you'll add it to your budget. Then, you'll transfer funds from that new account to your credit cards to cover their balances. This will put a negative balance on the new card equal to the amount you paid to zero out the two older credit cards.
The amount you transfer will depend on whether you make those pending payments - if you make a $50 payment, that's $50 less you have to put on the new card (give or take with the interest).
Then, your Credit Card Payments categories will also need to be adjusted — move money between them to show that the debt is now on the new card. Here’s a quick video that walks you through that process.
what should i do in the case that the amount transferred out of my old credit card is different from what is being charged to my new one due to the balance transfer fee? for instance, i transferred $x amount of money from an old card to a new one, but the balance on my new one is $x + 5%. if i treat the transfer as a payment it'll totally screw up my budget, but if i keep it as a transfer the the amount will be incorrect. similarly, if i just manually add a transaction for the amount of the fee cost, it'll screw up my budget. should i alter my starting balance to be the cost of the transfer fee?? or is there an easier/better way to go about that?