Transfer from credit card to fund new checking account shows as overspending - how to correct?

Hi,

I have a paid in full Mastercard. I recently used it to fund the opening balance of a new checking account, in the amount of $100. 

I created the new checking account as an on-budget account in YNAB. For the $100 credit card charge that funded the opening balance, I classified it as a transfer from the credit card to the new checking (no category needed).

This caused my credit card available amount (Payment column) to decrease by $100 (making it orange) and caused my Income:TBB number in the header to change from zero --where I like to keep it -- to $100 TBB.

I pondered the logic of this, and decided that to fix it I would simply budget that $100 TBB back to the card payment (manually), which makes sense since it does have to be paid. So I added $100 to the budget column for the Mastercard. This fixed the discrepancy between the available amount and the card balance, making the available number green again. However, when I click into the account screen for the Mastercard, it shows  "Overspending(Apr)" of $100.

I do not have overspending in any of my categories, and my budgeted amount to pay the card is equal to the amount owed on the card, so what is the source of this "Overspending(Apr)"?

And more importantly, what is the recommended workflow for moving money from a credit card to a deposit account? This was not a cash advance (technically it was coded as Services), but I imagine a cash advance transferred to checking would work the same way, as would the purchase of an on-budget gift card using a credit card. So I would like to know how to do this without the overspending warning.

Thank you!!

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  • You did everything correctly.

     

    The "overspending" is only overspending because you can't categorize the money coming out of the credit card since transfers can't have categories. You are simultaneously creating new debt and creating new cash.

    An alternative would be to use separate transactions, but then you would have to budget for the expense on the credit card side of things.

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  • Thanks  nolesrule . I found this thread after I posted, which outlines the issue in more detail; I guess it is a common problem for anyone who purchases gift cards and treats them as on-budget accounts: https://support.youneedabudget.com/t/x11trw/budgeting-with-gift-cards-bought-by-me

    I read that thread and can't quite get my head around the concept of how a clearing category works. In the example given, you have to have funds in TBB in order to follow the workflow, and I typically do not, except for the 3 minutes at the beginning of each month when I am actively budgeting.

     

    When you say "An alternative would be to use separate transactions, but then you would have to budget for the expense on the credit card side of things," could you please outline the steps, if you don't mind? 

     

    Also, and this is a question for anyone, will that "April overspending" that I currently see ever go away? Or will it follow me though all my YNAB days?

     

    I am tempted to turn my credit card into a checking account. I can see why people do this now.

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    • Hey  Marla E , looks like you found some help, but let's see if we can clear it up a little more for you! 

      I think what nolesrule means is that you could:

      1. Create an outflow transaction in your Credit Card account, categorize it to any category (say, "Account Start-Up Costs").

      2. Then you'd create a separate inflow transaction in your Checking Account for that same amount and categorize it to the same category as in step 1. 

      This way, you won't have that overspending notification as you've simultaneously spent and funded a category.

      Let me know if that helps or if you have any further questions!

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  • Hey Dan  that seems to have worked! And it was simple. I will use this method in the future whenever I transfer money from a credit card to a checking/savings account, or buy gift cards that I intend to track in my budget.

    I created an outflow transaction of $100 in my credit card account, and categorized it to "Clearing Category" (I figure I can use this any time I need to move money from a CC to a cash account, so I wanted to name it in a way that indicates its function).

    I did not budget for this "expense"; I just let Clearing Category go overspent for a moment until I completed the next step. 

    I created an inflow transaction to my new checking account and categorized it to "Clearing Category." That zeroed the category.

    Now my TBB is correct (zero), my CC payment category matches the balance owed, the new checking has the correct balance, my reports look correct (i.e. they don't show the inflow as income), and I do not see an overspending warning on my CC account screen. This workflow does what I need it to do.

    Thank you :-)

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