Budgeting with a Gift Card

I recently purchased a $200 Costco gift card with my Discover card, to receive the 5% rewards on warehouses this quarter (can't use Discover in store, but can buy gift cards online). The card will be used mostly for gas, but I may use it for regular Costco transactions. I'd like to track spending on the gift card (cash account), but I'm having trouble categorizing the transactions between the Discover card and the gift card.

I originally categorized the purchase as a transfer from the Discover card to the gift card, but that seems to screw up the CC payment category, and I have to add 200 budgeted to the CC payment category for the Discover card, and it shows the transfer as overspending under the Discover card. 

I also tried categorizing it on the Discover card as a regular transaction under the fuel category, and just adding $200 to the gift card as the starting balance, but that just gives me $0 available in the fuel category. 

What am I missing, or what is the best way to handle these transactions in YNAB? Basically, there's a $200 outflow on Discover and $200 inflow on the gift card, and I want it to show up as available in the fuel category.

Is it correct to categorize it as a transfer, add $200 to the payment, and add another $200 to the fuel category. To me, that seems like I'm actually budgeting $400, but is that just me thinking about it incorrectly?

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  • I wouldn't bother recording it as a transfer at all. Try creating a separate "Gift Card" category and doing it this way:

    1. Budget $200 to a "Gift Card" category, then use Discover card to purchase the gift card.

    2. Categorize purchase as "Gift Card" and now the budgeted $200 will move to the Discover category. Make sure to schedule the $200 payment to cover the expenditure.  This closes the Discover card loop completely. 

    3. Now, have a separate Gift Card *account* and record an inflow of $200. This $200 will now be in your TBB and you can budget it for "Gas" and track each individual expenditure on the card as "Gas" purchase until you hit $0 again. 

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  • That's perfect, thank you!

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