Credit card payment category throwing off TBB

We use credit cards as much as possible for the rewards, pay the statement balance in full each month, and spend within our budget. Income is deposited to our checking account and credit cards are paid each month from the checking account, never incurring interest charges. Credit card payments are recorded as transfers from the checking account to the credit card account in the budget.

So, why is our TBB completely off? It is far in the red, when it should not. It seems the Credit Card Payments category is throwing everything off. Very frustrating. We did not have this problem in YNAB4.

We upgraded to YNAB5 at the start of the year. I am a fanatic with our finances; not a single cent escapes me and it frustrates my wife to no end.

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  • The Credit card payment category in YNAB tells you how much money you have reserved for making credit card payments. This is different from YNAB4, where the category told you how much unpaid debt you were carrying.

    If you did a migration from YNAB4 the number of reasons that the category could be off is numerous, and due to the fact there are differences in the way YNAB4 and online YNAB handle certain functionality.

    If you started over when you switched over, then the most likely answer is you never budgeted for the starting balance when setting up.

    The CC payment category is like any other category in that you should only "spend" as much as the category holds, and if you want to spend more then you have to move money in from elsewhere.

    Regardless of how you switched from YNAB4, if you are a Pay In Full credit card user then the CC payment available balance should always be the number needed to pay off the entire card balance that is shown in YNAB. The corrective action is to budget money to the category to make this so.

    Going forward, theses will almost always stay in sync as long as you do not overspend your categories, since YNAB moves money spent on a credit card from the spending category to the payment category.

    Cash back will make the available to high, and you can reallocate that within your budget.

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  • Hi nolesrule, thanks for replying.

    Is it possible to make credit card payment category function like YNAB4, or so it does not affect TBB? Our cash and credit accounts are budgeted in a single financial "pool." Being a Pay In Full credit card user (to clarify, we pay the statement balance each month, not the total card balance) there is no purpose for a credit card budget category. It simply causes my budget to "double budget" if you will.

    We started our budget fresh, no migration. All account starting balances as of January 1st were accurate to the cent; nothing unaccounted for. There was no need to budget for credit card starting balances because cash in the checking account is transferred to the credit card. Everything zeroes out.

    I recall YNAB4 would create "Pre-YNAB Debt" categories for each credit card account, but it never affected the budget planning.

    The only solution I can think of is to change the credit card account to a cash account. That's essentially how we treat our credit cards. Was YNAB not programmed to accommodate this budgeting scenario?

    Thanks!

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      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 3 wk ago
      • 1
      • Reported - view

      Alan Yes, it can be done by setting up your credit card accounts as a checking account type instead of as a credit card account type. As long as you have no overspending on your categories and no negative TBB, this will always implicitly reserve the cash to pay back the card, like in YNAB4.

      However, as a word of caution, I must reiterate that you need to make sure you avoid or rectify all overspending for this to actually work. And you cannot be on the credit card float or carry debt.

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      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 3 wk ago
      • Reported - view

      Alan If in YNAB 4 you had Pre-YNAB debt categories that were not zero but you were paying the statement balance every month, then you were riding the credit card float.

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  • nolesrule I had to look up "riding the credit card float" and YNAB defines it as spending on the credit card before waiting for the money to come in. That is not the case with us. We have the cash to pay off our cards at any time and we don't spend until we have the money. It would be silly to pay off the credit card every day, so we simply pay the statement balance each month. Each year when I create a fresh budget in January, the credit cards have a balance, and I reflect that in YNAB as the starting balance otherwise I'd never be able to reconcile. The corresponding cash to pay off credit cards is waiting in savings and we never incur interest charges.

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  • Alan said:
    Each year when I create a fresh budget in January, the credit cards have a balance, and I reflect that in YNAB as the starting balance otherwise I'd never be able to reconcile.

     But do you budget to pay back that starting balance? if you were doing annual fresh starts in YNAB4, did you budget the pre-YNAB debt to zero with every restart? You essentially have to do the same thing in online YNAB with credit card starting balances in order to avoid the float, it's just you budget this money to the payment category isntead of against a Pre-YNAB debt category negative balance.

    The credit card float isn't about not paying the card daily. it's about having the entire balance on the card covered by money in your budget, so you can pay it off at any time without there being any negatives in the budget.

    Account reconciliation has nothing to do with the budget.

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  • If you are a Paid in Full credit card user your CC Payment category (positive) should equal your credit card account balance (negative). When you first set up the card you needed to budget the starting balance to the CC Payment category (you need to tell your budget that $1,000 of the money in your checking account is assigned to pay your CC).

    Let's say the starting balance was $1,000 - you budget $1,000 to the CC Payment category and this category now matches the account balance (with opposite signs). Any budgeted purchases made from here on out will automatically be removed from the budget category to the CC Payment category. So if you spend $100 on groceries your Groceries category will decrease by $100 and your CC Payment category will increase by $100. Your Payment category and your account balance still match.

    I'm almost positive you've been riding the CC float and didn't realize it because you always have enough cash to pay off the entire statement balance (the exact same thing happened to me when I first started nYNAB). I had paid my credit cards off for 20 years, but I hadn't included in my budget enough funds to pay the ENTIRE balance on the cards at any given time.

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  • Periwinkle Flute said:
    I'm almost positive you've been riding the CC float and didn't realize it because you always have enough cash to pay off the entire statement balance

    OK nolesrule and Periwinkle Flute, I believe I understand my error. Our cash balances are high due to saving monthly for large annual bills (winter heat, property taxes, vehicle registrations, insurances, etc). We have the ability to pay credit cards in full at any time. But we do not have the cash to pay off credit cards and all budgeted annual bills simultaneously--I hadn't taken that into account. YNAB4 has been my budget tool for years but I'm realizing I've handled the Pre-YNAB Debt categories incorrectly. I assumed those categories were intended to help folks pay off long term credit card debt.

    Just when I think I've had it all figured out... 🤣 somewhere along the way I screwed it all up!

    Thanks!

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  • You're welcome 😌

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