Do I assign money to Visa or the grocery store?

I'm confused about how credit cards fit in to the category system. They seem outside the normal categories of things like groceries and car repairs. They are the vehicle of payment, but not a good or service in and of themselves. I watched the Ynab videos and they say to budget money for the credit card. So, I guess I have to do it. But I am also budgeting money on groceries. So, if I use my credit card to buy the groceries, then how do I deal with this duplication?

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  • Once you buy groceries on the credit card, then move that amount from the Grocery category to the Credit card category so you can pay the credit card bill in full when that transaction comes due. I only use my credit cards for rewards points.

    • Just adding a clarification to what Shara says here: If you budget for groceries in the Grocery category, then purchase groceries on your credit card and categorize it as Grocery, YNAB will automatically move that money to your Credit Card Payment category so you're ready to make a payment when it's due. :)

      As long as you budget for spending this way, YNAB will have your back.

      You only need to budget directly to the Credit Card Payment category if you have an existing balance on the credit card when you start your budget. If that's the case, budget for your starting balance in the Credit Card Payment category.

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  • Since you're starting now, you budget for any pre-ynab balance directly to the credit card category (this includes statement balance, but also any transactions between the statement and now). This is for past credit spending.

    Going forward, you budget for groceries in the groceries category. YNAB, because it's smart, will automatically cause the money to "fly up" from your grocery category to the credit card payment category. This is because YNAB knows that the money hasn't left your checking account yet, but you'll need it to pay the card when the appropriate statement comes due. 

    If you have enough money to make your credit card payment category always equal (positive) to the (negative) credit card balance, then you've got Paid In Full (PIF) status.

    If you only have enough money to pay the statement balance when it's due, then you're on the credit card float. You will budget groceries normally and you can also budget to the CC payment category over time to reduce the float amount.

    If you're carrying CC debt, you'll budget groceries normally, and any extra payments you want to make to the debt will be budgeted directly to the CC category. 

    Does that make sense?

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  • You'd only manually budget money for the credit card if you already have a balance on them when starting YNAB. You want to pay off that existing balance. If you can within the month. If you can't, you budget for it until it's paid off. (So for example, if the balance is $500 and you can pay $200/month, you'll budget $200 this month, $200 the next and $100 in the last month - any interest will also need to be budgeted for but will have its own category (the name of that category could be something like "interest paid" or "interest, late fees and bank fees").


    If you'll pay for groceries with your credit cards tomorrow (after you've started using YNAB), then you tell YNAB that you used your specific credit card account to pay for groceries. The category you will put in will indeed be the groceries budget, but YNAB will automatically assume that you will pay down the credit card for the amount that you bought groceries for, and that will show in your budget as well.

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