Using a Credit Card that you pay off monthly...

Hello! First time poster here!

 

Loving YNAB but I'm wanting to utilize a system where I charge as much stuff on my credit card as possible and then pay it off each month. The plan is to accumulate cash back and travel rewards.

What is a good way to do this using YNAB? I want to still operate with the budget and log transactions, just don't know how to structure and track everything.

Surely someone else has tried this successfully...

Thanks!

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  • Thank you! Shockingly simple...

    Like 2
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 1 yr ago
      • 2
      • Reported - view

      Bobby Austin Yep. Many of us do this. YNAB handles it very easily. One common mistake new users make it to not budget for the current balance when adding their credit cards to YNAB.

      Like 2
      • MXMOM
      • MXMOM
      • 1 yr ago
      • Reported - view

      Bobby Austin YNAB is ideally set up for exactly this scenario. Everything that people hate about how YNAB handles credit cards is what makes the system so great. 

      Budget money for various expenses you have eg. food, clothes.  Pay these with the credit card. YNAB will allocate the amount you need to pay to the credit card to the credit card payment budget category. If you are using the web app, when you go into the credit card account, you will see the amount available to pay to the card in the payment bubble. Click record payment and save. The first time you will have to indicate from which account you are paying, but once you have done it YNAB remembers. And you don't have to worry that you are paying the card with money you need for other things.

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  • Bobby Austin I am not sure about other countries, but in Australia we have mortgage offset accounts.  My savings account doesn't pay any interest, but it does offset 100% against my mortgage.  For example, every dollar in my savings account reduces the total of my calculated mortgage interest payment, calculated daily.   I buy absolutely everything on credit, including all my bills.   Cash back and travel rewards are an added bonus, but in the 2 1/2 years I have been using YNAB, I have saved $2,500 in mortgage interest, and therefore reduced my mortgage by that amount, simply by using my credit card.   My credit card has 55 days interest free.  Do you have this type of offset account where you live?

    Like 1
    • Steel Blue Tiger Is the interest offset a 1:1 ratio?  In other words if you have a 4% mortgage do you basically get a 4% offset on the amount of money you have in savings?  If true then that seems like a good system, you basically pay interest on the net amount you have outstanding (debt-savings).

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      • Ceeses
      • Ceeses
      • 1 yr ago
      • Reported - view

      ynaber2613 It's a 1:1 ratio but the interest rate on mortgages with offset facilities are higher than without. So it might not be worth it until one has enough savings to offset the difference in interest rate.

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    • Ceeses yes, indeed.  1:1.   My rate is a bit higher as it is an investment mortgage @ 4.13% however, the net result is the same as if I put my cash into a savings account and earned 4.13% interest.   The added benefit is, it is just a reduction of interest, not taxable income. 

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    • Ceeses sorry, I replied to you and not  ynaber2613  however, I might also add that I have had the same facility on owner occupied mortgages at the lowest interest rate offered.    The bottom line is, you can't get that much interest from a normal savings account, tax free.   Let's also not forget that the original poster was wondering about the benefits of paying for everything on a credit card.   These are simple benefits that are the result of simple changes to how you might manage your cash and credit.

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  • I do this and was comfortable a few months after starting YNAB. Put all your cards on autopay. I have a interest earning checking & savings so I maximize keeping my money there, but no interest on my cards. I'm comfortable doing this because it all comes out of my budget at the time I spend on the cards.

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