Credit card payoff/interest mess! Please Help;)
I am a brand new Ynabber as of six weeks ago and this is my first time posting. I am so looking forward to any/all thoughts on my issue! THANK YOU in Advance!! I'll try to keep this simple:
I have my Citi credit card listed as an account. I paid it off, in full, the end of January. After doing so, my YNAB credit card account showed a POSITIVE balance of $56.71. I reviewed my credit card statement, which now has a zero balance, and noticed $56.71 is the exact amount of interest I paid in the payoff. I did some research, read YNAB help documents, and determined the best thing to do was delete my original payoff transaction, create an "interest and fees category" with the $56.71and make the payoff in two transactions (one for total amount owed and one for interest.) PLEASE NOTE: The original payoff transaction had already been reconciled with my checking account so doing this brought it out of reconciliation. Now I have a giant mess on my hands. Instead of showing the actual $0 blance, my YNAB credit card account shows twice the amount owed plus the $56.71 and my TBB is $-56.71. Can anyone make sense of this?!
Hey there, hopefully this explanation will make it simple. You don't need to do two separate pay off transactions but you do need to consider how to handle the interest which you are on the right track. It took me a bit to get a handle on this as well.
1. Delete those two new payoff transactions and recreate the original payoff transaction. Reconcile the card.
2. Create a transaction with a Payee of CitiCard Interest. You will likely need to create a new payee for this. Don't use the Transfer To/From one that is for the account. This new payee reflects that you are paying Citi for the interest. Categorize it to the "Interest and Fees" category. This transaction will be subtracted from the positive balance to make the Citi ACCOUNT balance zero.
3. Budget the $56.71 to the interest and fees category. Since you have a transaction, it will move the budgeted amount to the Citi CC payment amount to cover the amount that you have sent to Citi.
When reconciling your account, you may need to always manually add the interest transaction. One of my cards does not automatically import the interest even though it is on direct import. I don't know why but that is how it is. I always got the amount from the statement balance. To make sure I didn't forget, I created a scheduled transaction for the statement date for the interest. I usually estimated the interest amount but it can be left blank and serve as a reminder to check on it.
Step #3 is a bit confusing to me. My TBB is -$56.71. Do I need to find that amount in other categories to budget to the "interest and fees" category, even though I already paid it with the original payoff transaction? I realize I may not be thinking the way YNAB "thinks."
Yes, when you have sent the payoff, you sent money to the CC company that was flagged for another purpose in your budget. So now you need to move money around to reflect this money isn't available to use anymore and has already been spent.
In the future, your CC payment should not be higher than the amount reserved in the Available column of the CC payment category on budget. If you don't have enough money there, you need to budget more to it (or cover CC overspending that may have happened elsewhere in the budget, but the result is the same).