Family using my Credit Cards - How to best keep track?
My parents use a pair of CC that are signed under my name due to their financial past.
Tracking my own spendings with CC in YNAB hardly brings up any issues. However the transactions of my parents (which they pay back in full each month) are not listed in YNAB and therefore my CC account will generally show a bigger "To Be Paid" than my YNAB category.
Ofc I could completely disregard my parents transactions and tell YNAB that I paid "my" transactions of the card in full. BUt I feel like there is an easier way to track both transactions and have my CC category in YNAB not look wrong once my parents make the transaction.
The other solution I thought about is listing ALL transactions and putting my parent's into a "line of credit" account. Therefore any of their transactions should be shown as "credit" for me right?
Would that work as I think it will?
Thanks for any and all advice I can receive on this :)
The payment category isn't wrong, because their spending isn't budgeted. Until they pay it back or pay you so you can pay it back then the CC payment category is telling you exactly how much of your money is reserved to pay back the card.
Track all their spending transactions in a single category. Don't budget for it. The CC payment category will reflect what you owe only.
You do not make it clear how they are paying it. If they pay the card directly for their charges, inflow it to the CC categorized to TBB. It'll change the balance without changing the payment category.
If they pay you and you pay it, inflow the money to TBB in your account you receive the money and budget it to the CC category.
If you also need a way to track how much they owe, then their transactions can be a transfer to a tracking account, and the payments can be a transfer from the same tracking account. The balance of the tracking account, as a positive number, tells you how much they owe.
An alternative would be to take a chunk of your emergency fund and use it to pre-fund the category you use to track their spending in an amount larger than they would spend. Set a target balance goal equal to that pre-funded amount. You'll know the category is short when the goal is unmet. If they pay you the money, you would inflow to TBB and budget back to the category. if they pay the CC directly, then inflow to the CC and then move the money from the CC payment category to the parents spending category.
Another option is for you to apply for a different credit card and let the ones they use be solely for them and not track it in YNAB or if you do want to track it then make it a tracking account. I would prefer a clean break from their use and not commingle the transactions.
You could also at some point add them to the account as being responsible so they can rebuild their credit.
I would cut the credit card away entirely. What si it really doing for any of you except complicating things. They arent improving their own credit as it's your card. They are paying in full so assume they could simple use a debit card instead.
The moment they can't pay for whatever reason will, in my opinion, have a massive impact on your relationship. Not worth it.
In general, I agree with others who've said this isn't a good situation. You're cushioning your parents against the consequences of their decisions while preventing them from building credit. In your place, my preferred solution would be:
Budget a couple hundred bucks of your own money to help them get a "secured" credit card, if you live in the US (I'm not sure they exist everywhere). This is basically a debit card that looks like a credit card to the outside world. Let's say your parents start with a $300 deposit. That gets them a $300 credit limit. They pay it back every month like a credit card, and not doing so can cost interest. However, there are advantages over using a debit card:
- A secured credit card is reported to the credit reporting agencies like a regular credit card; so they could build a path out of their bad credit.
- In many cases, using a debit card results in a massive hold on your funds ($75-$150 every gas fill up, $250 or so for most hotel room rentals, on top of the price of the room). Holds are lower or non-existent when using a credit card, including a secured credit card.
- When using a debit card online (under US law), you have no protection against fraud. It's up to your bank whether or not you will be responsible for any theft of your debit card info, with no cap on what you could lose. However, in the US the cap on cardholder responsibility for credit card theft is $50 per incident (per card that is compromised). So, it's always safer to use a credit card online.
- You aren't responsible for any debt they incur, and their spending won't mess with your records or make budgeting hard.
I'm assuming you wanted something more helpful than the "cut them off completely option" based on the fact that you are doing this in the first place, so that's the best I can think of. Don't forget to introduce them to YNAB while you are at it.
That said, I do have a family member (other than my spouse) with a card on my credit account:
My son (L), back when he was under 18, had a credit card on one of my accounts for emergency spending, and to make shopping online safer, because he couldn't legally get his own credit account as a minor. Here's how I tracked it:
- L's checking account was a joint account with me at the same bank where I have my accounts. This made it easy to ensure that in non-emergency situations, he's not spending more than he has.
- If L. used his credit card for actual emergency spending, I paid it off. Small things came out of the appropriate household budget line (e.g. "transportation" when he got stranded at school due to a miscommunication and had to take a Lyft home). If any big emergency came up, I would have dipped into our emergency fund.
- If L. used his credit card for personal spending, I immediately transferred the corresponding amount from his checking account to mine. Both the new income and associated spending went in my "Miscellany" category.
- You could similarly fund a "float" or "parents" category and fund it enough to cover their transactions until they pay you back.
In the end, this just isn't ideal...because you stay your parents' creditor and bear risk for their transactions. Meanwhile, your parents miss out on chances to repair their credit.