Credit card refunds make no sense (to me)

I know this has been covered in this forum multiple times before but I still cannot begin to fathom how YNAB handles credit card refunds. I've watched the video in the help section on how refunds work and it is still counter-intuitive to say the least.

Like a lot of people, I had a trip booked for this summer but cancelled due to the pandemic. I paid for my hotel something like 8 months ago and just received a refund today.

I had $700 in my Amex payment category. The Amex had a balance due of $1100.

I received a refund of $1500 on the Amex which I then allocated to my vacation category.

Now my Amex payment category is -$400 and it seems like I have to come up with $400 to cover this "overspending". I cannot for the life of me understand why a refund is treated as a payment and not a cash inflow.  It really feels like I somehow took on more debt by getting a refund. I'm half tempted to close out the card or make up phony transactions to make this issue go away.

I'm sorry if I seem angry - I am very frustrated with how YNAB handles refunds.  It's the second time I've had this kind of issue in the many years I've been using YNAB.  Hopefully someone can help me make sense of this or at least find a way to work around it!

Thank you!

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  • Budgeted spending increases the amount reserved for the next payment, right? Therefore, a refund reduces it. You don't need to pay as much since the refund already lowered the debt.

    2nd thing: you now have a positive CC account balance, +$400. What you're missing is TBB has been increased by $400 as well. YNAB has given you the funds to fix the red warning in the Payment category.

      • Pink Piano
      • Pink_Piano.5
      • 2 wk ago
      • Reported - view

      dakinemaui Thank you so much for the response!!!

      My CC account does show as positive, but my To Be Budgeted is still the same amount it was before I imported the refund transaction :(

    • Pink Piano It went toward fixing the overspend correction in next month's area (which was lower because of the negative category in this month). Enter the budget value in the current month's area and both months should be resolved.

  • Pink Piano said:
    I cannot for the life of me understand why a refund is treated as a payment and not a cash inflow

    It is treated as an inflow. Your Vacation category is now higher. The problem is that it is not a CASH inflow. That requires a net $0 change to the budget (no new cash, right?), so the Payment category is reduced by the same amount.

    Ordinarily, this is all that happens. However, since the CC account is now positive, you DO have more cash. (Your next CC purchase does not have to be paid back.) YNAB puts that new cash into TBB so you can give it a job.

    Perhaps it should be smart enough to apply it to the overspent Payment category, but that's not the case at present.

    Like 1
  • you were already short $400 in the payment category before the refund.

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