CC interest & fees

I have pre-existing balances on my credit card, and I get charged an interest/fees charge.  When I import that expense into YNAB, I don't know how to categorize it. While I make monthly payments on my credit card, I don't specifically budget for those payments from the 'interest & fees' categories in my checking account.  So I don't want it to go against that category...but maybe that's where it's supposed to go?  If, for example, I pay $115/month on my CC, and $35 of that is fees, should I split that expense between 'interest/fees' and 'credit card payment'?

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  • I'd recommend using the Interest & Fees category to budget for those interest charges. The reason it that it makes it easier to see how your payments are affecting your ongoing balance—and set a goal to have your balance paid off by a particular date.

    Here’s more on how to account for interest charges when you’re carrying a balance on a credit card.

  • Interest is like any other CC purchase -- you are buying time. (The transaction date is typically the same as the statement closing date, if you are not importing.) Recommended practice is to budget for purchases in advance of the outflow. 

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  • You should split interest out as it is added to your monthly payment next month.  So that $35 will get added to your $115 and next month you will pay $150.  

  • The other thing is that when you split it out into interest and fees you get a much better idea of how much you are spending on it. And then you know how much your debt is costing you. When you just drop it into the CC payment, you don't have a record of it.

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