How to deal with a starting balance on credit cards

I've read and watched videos about credit cards in YNAB, and, like others, don't think it's straight forward. I understand the basic concepts - that an expense in a category in the budget will add to the credit card payment (i.e. make it green). Paying off the credit card will make that payment zero.

The problem starts when you have a starting balance on the credit card, which is a reality for everyone, even people who pay it off consistently.

Suppose I start YNAB today. I am going to add a checking account and a credit card. I've said BullCard has a $100 the day I added it to YNAB, which makes the "Cleared balance" -$100. In my budget, all three columns for BullCard are zero. I claim the starting balance on my checking account is $200 because I'll want to pay off the credit card in full in this example.

Now let's say I have budgeted $50 for gum. Three days after starting YNAB, I purchase $50 worth of gum on BullCard. I enter a transaction in BullCard with an outflow of $50 and a category of Gum. Back in my budget, Gum now has 0 available, and BullCard has $50 for payment (positive; in green). So far, this is exactly as all the credit card tips I've read explain it to be.

Now it comes to the day my credit card bill is due. But remember, I owe $150, not just $50, because I had real-life transactions on that card before I signed up for YNAB, but they're not in YNAB.

As recommended, I go to BullCard, click on "Record Payment", and it defaults to $50, not $150. I select my checking account in the Payee, and enter $150. Now Bullcard says -$100 for "Cleared Balance" (as before), +$100 for "Uncleared Balance" (-$50 for gum +$150 of a payment), and $0 for "Working Balance" - which means I've paid off my credit card in full.

However, "Payment" is now at -$100. Back in the budget, this number is red. When I click on it, YNAB says I need to cover this overspending.

Recall that I started with $200 in checking and -$100 in the credit card. So I had $100 when I started YNAB. Then I spent $50 (in the YNAB way, we don't care where it came from, just what its job is) and thus today I have $50. This is reflected in the account balances, which, after my credit card payment, show $0 in BullCard and $50 in checking.

But in my budget, it says I have $150 to be budgeted.

So the correct way to handle covering this existing balance on the Credit Card is to "Cover the overspending" with "To be Budgeted". That clears "Payment" to zero (I don't owe anything on that card), and "To be Budgeted" is reduced to $50, reflecting money I actually have in this example.

This was very confusing to me and it took me working through this simple example to figure it out. I think calling "having paid more into the credit card than YNAB is aware of" an "overspending problem" is very confusing - I'm simply covering for history that YNAB doesn't have.

As others on the forum have done, I imported an entire month's worth of transactions manually to learn a bit more how to handle things in YNAB and this part really threw me for a loop. Perhaps the developers can make this a bit more clear somehow. I hope others find this helpful (I actually was posting this as a question and then realized the solution as I worked through the example :)

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  • The short version:


    If you pay off your credit cards every month (or even more often)

    1. When you add your credit card account to YNAB, enter the current balance.

    2. Go to your budget, and immediately budget that exact amount to that credit card.

    3. As the month proceeds, enter (or sync) transactions as you normally would. 

    4. When you decide to pay off your entire card, use the "Record Payment" button and it will automatically add up to the correct number only because you added the starting balance to your budgeted amount in the first place. If you don't do that (as you saw me do above), YNAB will suggest a payment which does not cover the actual balance on your credit card.

    If you have a red number on a credit card after setting them up this way, it means you overspent on an actual category in your budget, and that's a real issue.

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  • YNAB doesn't assume you plan to pay that starting balance off. Since you do, simply reserve additional money to do so (a one-time budget to the CC Payment category).

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  • Hi Cornelius Gemstone !

    When you add a credit card in YNAB, you're prompted with three options: budget for your starting balance, pay it down over time (and set a goal) or skip the setup. We recommend one of the first two! So you can plan for it in your budget.

    If you haven't checked it out yet, I highly recommend our Master Credit Cards with your Budget workshop. You'll find it helpful even if you pay in full each month.

    Importing past transactions is possible, but you're right—it does take some extra work to get things to line up. We encourage YNABers to start from today and not look back, so when you set up an account it will start with today's date. So you're moving forward with your new budget, instead of backward!

    We're always looking for ways to improve the app, and appreciate your feedback! I understand you'd like to see more clarity with credit cards. If you'd like to submit an idea for consideration to our product team, please submit a Feature Request.

    Let me know if you have any questions!

    • Nicole this is great, thanks! As I did various “wrong” things in trying to figure out YNAB (deleting transactions, etc.) I highly recommend sandboxing things with fake numbers in a test budget before diving in for the real deal, then I would have realized the value of that option at account creation :)

      • Khaki Storm
      • YNAB book topics online:
      • Khaki_Storm.1
      • 1 yr ago
      • Reported - view

      Cornelius Gemstone yes, love sandboxing

    • Cornelius Gemstone I'm not sure as a newbie that I would have been put into a situation where I would make mistakes in a sandboxed budget.

      The real budget is what I think prompts the desire to do "something", which may be right or wrong.

      Realistically, I think a better solution than sandboxing is to be able to revert to a previous version (prior to the mistake). This was a well used feature in YNAB4. The limited Undo implementation in nYNAB is better than nothing, but should have been improved years ago.

      Like 2
    • dakinemaui I agree with you 100%. Being able to undelete transactions / reimport from a given date would be huge.

      Like 1
  • To be as advanced as YNAB is, it's ludicrous that they don't make this simpler. I'm restarting the budget for like the 6th time b/c the CC issue constantly screws things up. I'd rather just have my money back at this point. I pay my balance in full, but i do it pay it in the next month after my statement is closed (for previous purchases). Now I can't even get my CC to sync accurately. Furthermore I see a lot of people on the forums saying to manually enter every transaction. That seems absurd to have to do when you pay almost $100 yearly for a budgeting software. Really frustrated with YNAB and wouldn't recommend it to anyone.

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      • Habanero Salsa
      • Second generation user
      • Aquamarine_Pony.8
      • 1 yr ago
      • 2
      • Reported - view

      CR77money Entering transactions manually seems less absurd when one thinks about the software’s purposes as helping you look forward and make decisions based on the best information, not serve as a ledger for what you’ve already done and moved on from. 

      If all someone wants is a record of spending, I can see why it would be frustrating not to have that happen automatically. 

      I’ve never imported a single transaction, nor has anyone in my family. I’d consider it absurd, especially at this time of year when there can be even more daily transactions which can take even longer to clear, to wait to see cleared transactions before making spending decisions. I guess it depends on what one is trying to get out of the software. 

      Like 2
      • CR77money
      • Sky_Blue_Yearling.4
      • 1 yr ago
      • Reported - view

      Habanero Salsa I'm glad it has worked for you. My issue is that my spouse (and me to a lesser degree)  finds motivation in seeing benchmarks met for future goals.  A new sofa, a cruise, renovating a dream house that needs 50-60,000 of work. I understand I can set goals and fund those categories, but the function of YNAB's lack of cashflow planning and future planning of the ledger is frustrating. Also the credit card issue is a huge hassle. I'm not a float, but things always get messed up with my statement not closing until the 4th of the month and pending transactions having to clear. It's just a personal preference I suppose. It's very close to what I want, but it seems YNAB is entrenched to not add some of the features that I and others really want to see as they are afraid it would offer a substitute to their hard and fast rules. Again I'm not mad at's their product. I just ceased using it because it hasn't worked for me. i have an excel spreadsheet that does everything i need. It is just time consuming to enter things manually and it lacks the pretty report function that YNAB has. That's what I am willing to pay for. Best of luck to you and others that find YNAB helpful. We all want the same thing! 

    • CR77money in spite of your assertion you're not floating, the fact you have any consideration of a statement closing date indicates otherwise. The money for every budgeted purchase is available IMMEDIATELY to send off to the CC company. If you don't have enough money reserved to do that then you most definitely are riding the CC float.

      If you wish to change that, your CC Payment category needs to cover the entire debt in the account.

      Like 2
      • Habanero Salsa
      • Second generation user
      • Aquamarine_Pony.8
      • 1 yr ago
      • Reported - view

      CR77money None of that has anything to to with the purported absurdity of manually entering transactions. 

    • the software’s purposes as helping you look forward and make decisions based on the best information, not serve as a ledger for what you’ve already done and moved on from. 

      Came here with the same problem as  OP. I guess that I want YNAB to be both a ledger and a forward focused tool. I want to know where I've been AND where I'm going.

      Also, as someone who designs software for a living, the user experience leaves much to be desired.

  • CR77money said:
    the function of YNAB's lack of cashflow planning and future planning of the ledger is frustrating.

    Future planning if the ledger works great in my view. If I have an expense in the future, I set aside money between now and then so I can afford it at that point. Perhaps I misunderstand your meaning?

    "Cash-flow" in the typical sense means one wants to spend money earmarked for some other purpose early and hope to not get caught. You're right, YNAB absolutely works to prevent that sort of thing. If that is your intent, it is best to look elsewhere. However, if you want a tool that will help you make an *unambiguous* plan that is readily executed and easily altered as circumstances dictate, well than YNAB is better than anything else available that I've found.

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