New CC Added - What's the starting balance?

I received a new credit card with a credit limit of $300. I created a CC account in YNAB with an "inflow" starting balance of $0 since there hadn't been any charges made to the card yet.

I was playing around with CC charges and payments in YNAB and I've confused myself in the process; the numbers weren't zeroing out. Instead, the balance grew by the amount of the payment. So a card with a $250 balance owed + a $50 budgeted payment = $300 when I was expecting it to = $0.

Should I of entered an inflow of $300  for the starting balance instead of $0, since that's the available credit on the card?

I think I'm also not quite understanding the purpose of the CC category's "budgeted payment" amount column, since it seems to make the credit card balance grow instead of zero out? (Example: $250 activity, $50 budgeted = $300 "in the green" instead of $0)

And does the CC category being in the green, mean I have that much available on the card, or does it mean that's how much I owe on the card? I assumed red meant I owed, but then the amount had a negative sign to it (such as -$250).

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  • Hi, BlueJhay .

    Entering a starting balance of zero is correct. So far so good.

    Now, as you spend using the card, you will enter a transaction in your cc register for the funds spent. Let's use buying a pizza as an example. You enter the payee (Fast Freddie's Pizza Delivery), the category (Eating Out), the amount $27.50.

    On the budget screen, you will see the -$27.50 appear in the activity column of your Eating Out category. Assuming you had sufficient funds in the Eating Out category, the $27.50 will be siphoned off and moved to the credit card payment category at the top of the screen. This is YNAB reserving the money to pay the credit card at the end of your statement period. You'll see $27.50 in green showing that is how much you have available to send to the cc company.

    When you pay the cc, you will enter a transfer from your transactional account (chequing probably) to the credit card account in the amount of $27.50.  When you go back to the budget screen, the $27.50 that was available to pay the cc is now gone. YNAB knows you have used it for your payment because the cc account is linked to the payment category.

    Note: if you didn't have funds in the category, YNAB will turn the category orange to alert you to the fact that it needs your attention. If you don't add funds to your eating out category, YNAB cannot move those funds to pay for the pizza. YNAB will assume you intend to carry that amount as debt and deal with it at a future date, so there will be no green funds available in the cc payment category to pay the cc bill this month.  Once the month progresses to the next month, the way to pay off that pizza is to budget directly into the cc payment category.

    Does this help?

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  • Hi BlueJhay !

    HappyDance is definitely pointing you in the right direction, I just wanted to offer a few links you may find helpful! :)

    To learn more about how credit cards work in the new YNAB, take a look at our Quick Start Guide to Credit Cards and consider taking our Master Credit Cards with your Budget workshop!

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