Credit Card Overpayment and "Ready to Assign"

Last month, my wife and I accidentally paid our credit card twice.

To keep things simple, let's say it was $3,000.  We paid the full amount ($3,000) then accidentally paid it in full again (another $3,000). 

Thankfully, we actually had enough in the bank (way to go budgeting!) to cover the double payment.

In the credit card account in YNAB, we ended up with two "Payment:Checking" transactions, each $3,000, for a total of $6,000. Neither is categorized, because they are payments. 

The first payment was fully funded by budget categories; the second payment was simply a transfer not funded by anything, budget-wise. 

Realizing our mistake, I called the credit card company, which then transferred the errant $3,000 back to our checking account. The refund went through. To reflect this, I transferred $3,000 from the YNAB credit card account to the Checking account.

As a result, the $3,000 is now sitting in the right account (the Checking account).

Here's the problem - when it comes to the budget and "Ready to Assign",  YNAB is categorizing that $3,000 as "Inflow from Debt Account". 

This strikes me as double-dipping.

When we overpaid the credit card, that $3,000 came from a pool of money that was already spoken for.  Every dollar already had a job (and that job wasn't "overpay the credit card"). If I went ahead and assigned that money to categories, it seems to me that every dollar would end up with two jobs.

So ... how to fix this?

Since the whole thing ended up being a null transaction - we got back exactly what we overpaid - it seems to me that I could just delete those transactions from the checking account (where the money came from ) and the credit card (which received, and then refunded, the money). 

I'm thinking that would clear up YNAB's "Ready to Assign" confusion because it wouldn't suddenly have this mysterious $3,000 to do something with.

Does that make sense? Is there a better way to resolve this?

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  • What does your CC payment category look like?

    Did you ever cover the overspending in the CC payment category from the double payment?

    Like 2
  • Let's say your Credit Card Payment category had $3000 in it, and that $3000 payment brought your Credit Card Payment category and account balance to $0.

    Then you made the second payment - this moves $3000 from your Credit Card Payment category (now -$3000) to Ready to Assign. The balance on your card is now +$3000.

    Then without moving any of the above funds, you transfer $3000 back to your checking account from your credit card. There aren't any changes to your Credit Card Payment category or Ready to Assign with this transfer.

    To solve the issue, you still need to move the $3000 from Ready to Assign to your Credit Card Payment category, and everything should be back on track - no double-dipping! 

    Like 1
  • nolesrule I'll be honest - credit card payment categories are a mess. When we started using YNAB,  we had trouble getting our heads around what those categories are doing and how they related to reality. As a result, we've typically handled payments as payments from our checking account to the credit card account rather than by using the Credit Card Payment category. 

    At some point this fall, I need to go back and figure out YNAB's approach to credit cards.

    Thanks for the advice, folks.

    Like
      • nolesrule
      • Stealing From the Future fix is an improvement but is incomplete....
      • nolesrule
      • 2 mths ago
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      • Reported - view

      Atomic Robot If your credit cards are budget accounts and you ignore the Credit Card payment category, your entire budget could be unreliable.

      Like 1
    • Atomic Robot I don't know if this will help with understanding how credit cards and the payment categories work, but here's how I think about it.

      I have a bag of m&ms (or whatever small sharable candy). My brother gave me money for a third of the cost, so I promised I'd give him a third of the candies, but he's at work right now, so can't get his share. So every time I eat two candies, I put one aside for him. That way, when he gets home from work, I haven't eaten all the candies, and I make sure my brother gets his full share.

      That's what happening with the credit card. You've promised the bank that share of the money that you're spending using the card. So YNAB moves that money from your pile (the spending category) to the bank's pile (the credit card category), so you don't accidentally use the money you've promised the  bank.

       

      Overpaying the bank causes issues, but that's generally a different story. *says the person who is dealing with having overpaid the credit card.*

      Like 2
    • Atomic Robot Getting your credit card accounts on track is often a one time fix, and we can help you with that! Just reach out to us in-app for help. 😊

      Like 1
  • Atomic Robot said:
    As a result, we've typically handled payments as payments from our checking account to the credit card account

     This part is correct. A credit card payment is recorded as a transfer from checking to CC with no category.

     

    Atomic Robot said:
    rather than by using the Credit Card Payment category.

     This part is incorrect. When you make a payment to a credit card, even though there isn't a "CCP Category" in your register, YNAB automatically deducts the amount of the payment from your Credit Card Payments category. If you don't have enough money in the CCP category to cover the payment that you just made, your CCP category will show negative red, same as any other cash overspending anywhere in your budget. If there's more in the category than you need to make the payment (i.e. if you only pay the statement balance every month), the excess available stays in the category until your next payment.

     

    Atomic Robot said:
    At some point this fall, I need to go back and figure out YNAB's approach to credit cards.

     When you purchase something with a credit card, the money hasn't actually left your budget yet - YNAB just changes the "job" of the money from "groceries" to "credit card payment" by moving it from your grocery category to your CC Payment category. Paying the credit card is when the money actually leaves your budget, so it exits through the CC Payment category.  There are nuances, but that's the key to understanding how CCs work in YNAB.

    To right the ship going forward, assuming you're a "paid in full" (paying at least the statement balance every month) card user, you'll want to make sure that the entire negative (owed) balance on each credit card has a matching positive balance in the corresponding payment category - e.g., if the balance on the card is -$1000, the payment category should be +1000. If the balance on the card is zero or positive, the CC category should be zero. If you've been ignoring your CC payment categories for a while, some of them might be short and some might have too much in them, and for the moment the specific "whys" don't really matter. Move money around until everything matches up, and keep an eye on it going forward. 

    Like 1
  • I haven't read in detail all the previous replies, but what I think would be easiest is to just delete the duplicate payment from the CC account and reject or delete the refund to your checking account.

    Essentially, pretend the extra payment never happened... because that's effectively what happened.

    I do this every once in a while when I have a large payment that I'm going to reimburse myself from an account not in my YNAB budget. It's much easier than trying to manipulate categories and accounts to get an outcome that is net-zero and unbudgeted in the end.

    Like 1
  • jdg0928 Thanks - that's what I ended up doing; as you say, it's effectively a null transaction.

    Like 2
  • Vibrant That helps.

    If I understand correctly ... when I charge something on my card ($10 for a new book) and categorize it correctly ("Entertainment"), YNAB effectively transfers $10 from that category to the credit card category for that account (Atomic VISA).

    Assuming I only have that singular $10 charge for the month...

    1. My Atomic VISA credit card account balance should be -$10.

    2. My Atomic VISA credit card budget "category" (listed under the "credit cards" section of my budget) should be +$10 (reflecting $10 that's ready to be used to pay the bill).

    When I pay my bill - either by transferring money from my checking account to the Atomic VISA credit card account or clicking the "Record Payment" button (which does the same thing) - I'll see:

    1. A $10 transfer from my checking to my Atomic VISA credit card account. 

    2. The balance of the Atomic VISA credit card account becomes $0.

    3. The balance for the Atomic visa credit card budget "category" becomes $0.

     

    That right?

    Like 2
    • Atomic Robot You've got it!

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      • Ceeses
      • Ceeses
      • 2 mths ago
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      • Reported - view

      Atomic Robot Yes, that's right. Things seem a bit more strange than that in practice because credit card payments are delayed. At the time of the payment, you will be paying the expenses of the month before as the statement is closed quite some time before the payment is due.

      But because YNAB will leave the money for each purchase in the credit card payment category at the month rollover until you send it to the credit card company, the money should be in the category when you need it.

      You have no credit card debt if you could pay back your credit card balance at anytime with cash you own. The way this is represented in YNAB is if your credit card payment categories always match the absolute value of each account balance (i.e the balance amount but positive).

      Like 1
  • Ceeses said:
    The way this is represented in YNAB is if your credit card payment categories always match the absolute value of each account balance (i.e the balance amount but positive).

     I prefer to state it as "the exact amount needed to pay back the entire credit card balance shown in YNAB."

    This is because you do not need to pay back  a positive credit card balance, and the category should be zero for positive balances. Using the absolute value would be a non-zero number.

    Like 2
    • nolesrule So many words, either way. 🙂 I started saying absolute value in an effort to be concise, but it really requires the phrase "absolute value of the negative working balance." Ah, well.

      Like 1
    • Move Light Sound Life nolesrule Mmm - I appreciate your discussion here! I usually say that "the amount in the Credit Card Payment category should be a green and positive match of the amount you owe on the card" but I think I might revisit. 

      Like 1
    • Marisa 

      Marisa said:
      amount you owe on the card

       I think sometimes people don't know what they owe on the card.  Cleared? Working? Statement? Which balance?  Many people don't understand how CCs work, and I was one of them until I got to this forum.  Even if they do understand the different balances, they could interpret "owing" to the card as any of those balances.

      PIF in YNAB compares the working balance (up to date with all pending transactions, not waiting for an import, though I suppose that's my opinion) with the payment category.

      Like 1
    • Marisa That's mostly accurate, because if you have a positive balance, you don't owe anything. 

      Although sometimes mine is yellow when I have scheduled payments for more than I've yet spent. I can't remember if that's a toolkit thing or native YNAB thing.

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  • Last night we wrangled our budget and got everything balanced appropriately. The credit card category balances are all green, but 3 out of 4 of them are between -$30 and $120 short of their corresponding credit cards' working balance.

    Fortunately, all of the credit card category balances are sufficient to pay the credit card statement balance. As I understand it, if I tried to pay the credit cards in full, the three credit card category balances that are short would go red, indicating there wasn't actually enough money budgeted to pay them. 

    So as we continue to figure this out, the safe bet is to pay the statement balance and continue to work through the credit card budget category shortfall.

    Many thanks for everyone's help with my initial question and the follow-up ones; this was very helpful. 

    Like 4
  • Atomic Robot said:
    As I understand it, if I tried to pay the credit cards in full, the three credit card category balances that are short would go red, indicating there wasn't actually enough money budgeted to pay them. 

    That's exactly right! If you pay the balances owed all the way to zero, but your Credit Card Payment category is short of that amount, you'll see cash overspending in the Credit Card Payment category(s).

    The plan you've outlined here is great! Add money to those CCPC's as you can, until they are equal and opposite the (negative) balance owed, and be sure to check the available amounts before sending payments to your cards, and you should see pretty smooth sailing moving forward!

    Like 1
  • Atomic Robot said:
    but 3 out of 4 of them are between -$30 and $120 short of their corresponding credit cards' working balance.

    If you have categories that can be trimmed, you can reallocate funds from those categories to the credit card payment category to move yourself off of the credit card float.

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