I give up on credit cards

I've been a YNAB user since before the cloud version (when you had to sync via dropbox.)  My wife and I use cash-back rewards cards for everything, and pay them off in-full at the end of every month for the rewards ...

In the "dropbox" version of YNAB, credit cards made sense to me, and the numbers all seemed to add-up nicely.  Credit cards weren't a problem ...

Now..?  God ... I just don't get it.  Ever since moving to the "cloud" version a few years ago, I can't figure out what changed, but our credit card numbers just don't make sense anymore.

I've restarted our family budget more times than I'd like to admit.  At the start, things all line-up nicely (duh, because we started fresh.)  But once we start chuggin' along ... receiving paychecks, making CC payments, etc ... once life starts movin' along ... lord help me, I can't make heads or tails of what's going on.  It eventually gets to the point where the numbers in YNAB don't make sense, and all I'm doing is making sure our checking account has enough "padding" to cover our expenses as the bills go out (and we're fortunate enough to have enough income now to cover everything, so it isn't a question of making ends meet anymore.)  Essentially, the "buckets" in YNAB just become vague, meaningless abstractions, because I can't get things to line-up nicely with our credit cards.

We finally just gave up.  We're moving everything OFF our credit cards and going back to debit cards, because we have some financial changes coming up and we NEED our budget to make sense to us.  I suppose in a way, making credit cards confusing as he** has accomplished something: it forced us to give them up.  Of course, we're losing the cash back rewards, which is a huge bummer ... we were bringing in a few hundred quarterly with our rewards.

If you're reading this, and it resonates with you, I welcome any suggestions you can offer that may have been helpful to you in figuring out how to make sense of CCs in YNAB.  For now, we're basically regressing multiple years in our spending and budgeting habits and going back to the proverbial checkbook-balancing method.

PS: don't tell me to checkout the tutorials on credit cards.  They're completely unrealistic ... spending $100 on groceries and watching the money move from my 'grocery' bucket to my 'cc' bucket is grand, but is in no way helpful when you have multiple accounts, credit cards, and incomes all moving at the same time.

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  • Credit cards are pretty easy. Make budgeted purchases on categories, avoid overspending after the budgeted purchase and then pay no more than what the credit card payment available bubble says you have available for payment.

    If the payment available category is not the exact amount needed to pay the entire working CC balance in YNAB, you did something other than the above. It doesn't matter what, but you then just need to adjust the payment available so it matches again. There really is no reason to hunt down a reason, but the most common of those reasons are:

    • overspending
    • transfers to other budget accounts
    • credit card rewards
    • refunds of a purchase after the payment has been made


    The other alternative is just to set up the credit cards as checking accounts. Then it is implicit that the cash is reserved to cover the entire balance of your card due to the difference in the way YNAB handles cash accounts vs. credit accounts.

    Like
    • nolesrule Does paying  less then the Payment Available cause issues?

       

      Asking as my accounts and transaction reconcile, but my CC payment available does not.  I never pay the payment available.  I pay off my credit card each month, to the amount listed on the paper statement

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      • Vibrant
      • No more counting dollars, we'll be counting stars
      • vibrant
      • 3 wk ago
      • Reported - view

      WhoMovedMyCheese the available payment amount should always inversely match the total balance of the card (i.e., card with a -$1000 balance should have a payment category Available bubble that is green $1000). If you pay your statement balance of $480, the card account balance will become -$520 and the available for payment amount will go down to $520.

      Like
    • Vibrant Thank you, that makes perfect sense.

      Like
      • nolesrule
      • Been waiting 5 years for the Stealing From the Future fix...
      • nolesrule
      • 3 wk ago
      • 2
      • Reported - view

      Vibrant 

      Vibrant said:
      the available payment amount should always inversely match the total balance of the card

       More accurately it should be the exact amount needed to pay off the entire card balance.

      If a card balance is positive, the amount needed is ZERO, rather than a negative number of the same magnitude as the positive card balance.

      Like 2
  • It seems a shame to give up the cash back rewards. I just started a cash back rewards card last year and the extra $ in my TBB has been really nice!

    As a new-ish YNABer, I can't tell you more details, but as  nolesrule mentioned, setting your credit card account types in YNAB to "checking" may make them work in a more intuitive way for you. Here's a discussion from the forum about it, note that it includes some caveats/considerations:

    https://support.youneedabudget.com/t/m2gxzq/classify-credit-card-account-as-checking-account

    Another thing you can try (if you're not doing this already) is entering transactions manually and then reconciling very frequently, as in daily. Doing this for a week or a couple of weeks, whatever else you do with these accounts, might help you identify problem areas.

    Finally, you could search the forum for a text phrase describing how your accounts go "off" - there are tons of discussions here about people's issues with ccs, yours may be one of them!

    Like
  • Don't quit using CCs because you can't figure out the CC handling. Instead, change them to checking accounts and then they'll work the same as in YNAB 4:

    Convert Credit Card to Checking

    1. Create a new account to replace the current one by clicking Add Account > Unlinked.  Select Checking, give it a nickname (it will need to be slightly different than the original account), and enter 0 for the balance.
    2. Go to the original account, select all of the transactions, and move them to the new account using the Edit menu. The next step will be to delete the original account. First check the Notes area for the credit card payment category in case there’s anything there you want to save.
    3. Okay, it’s time to delete the original account. Click the Edit icon next to the account name in the left sidebar, and you’ll see the Delete Account button. Be sure to save any text in the Account Notes field if needed.
    4. Now, you can edit the name of the new account and/or link the account if you'd like.
    Like 1
  • In YNAB 4, it was possible to ride the credit card float and not know it--you could send more to the card than was reserved for its payment in the budget if you weren't paying close attention, because that amount was not listed anywhere. So this might be the culprit, too. 

    I agree with others that you can just make it a checking account if it bothers you. I'm an old-timer who uses the native card handling and find it to be just fine. The key is that the card category needs to equal working balance on the card. Always. If it diverges, you've screwed something up and whatever that something is needs to be fixed (or you need to budget money to the card). 

    Like 4
  • YNAB4 maintained the post-payment debt at all times. Certainly, it didn't have the warnings that WordTenor hinted at, which was a problem. However nYNAB traded that problem for a system that will doesn't maintain the post-payment debt unless you watch it like a hawk.

    It must be underscored that the advice to use a checking account is only appropriate for paid-in-full cards. As nolesrule said, enough to pay the entire balance is implicitly reserved for payment at all times. If you are riding the CC float, the impact to the budget may be shocking, should you switch.

    Riding the CC float is indicated by a CC Payment category that does not cover the entire debt (account balance).

    I would advise you to reallocate to make the CC Payment category match the account balance first. If that doesn't leave you short in other categories or TBB negative, then you're probably ok to switch.

    Like 3
  • Since you're switching to debit cards anyway, I would look into one of those rewards checking accounts. My checking account (with a local credit union) gives me 3.3% APY if I meet a few criteria such as 15+ debit card transactions and at least 1 direct deposit per month. You might even earn more than you would have with your credit card.

    I too had issues with credit cards in YNAB. I did a fresh start and things seem better now but I can completely understand why you might want to never use credit cards with YNAB.

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      • Vibrant
      • No more counting dollars, we'll be counting stars
      • vibrant
      • 3 wk ago
      • Reported - view

      Jessarox this is actually potentially backwards advice. Most rewards checking pay dividends based the average daily balance of your account, not on the dollar value  of your transactions - meaning you want to keep your money in the account as long as possible by putting all your  spending on credit cards, not on debit except the bare minimum needed to meet the eligibility requirements. 🙂

      There are also checking accounts that have cash back or rewards debit cards that operate more like rewards credit cards (where the reward is based on spending) but IME there is usually a cap on the rewards that can be earned that make this account type less desirable. In any case, it's important to know which type of account you have so that you're correctly maximizing your rewards. 

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      • Jessarox
      • Jessarox
      • 3 wk ago
      • Reported - view

      Vibrant On the flip side, credit cards only give you rewards on what you spend, not the amount of money sitting around in your checking account. I think it's fair to say that most YNAB users have a decent amount of money sitting in their checking account at all times (even if they use debit cards for daily spending), particularly those who are budgeted several months into the future.

      Also, OP said they are giving up on credit cards so they'll be using a debit card no matter what. Might as well get a rewards account if you're going to be using a debit card anyway.

      Like
  • Jessarox said:
    most YNAB users have a decent amount of money sitting in their checking account at all times (even if they use debit cards for daily spending), particularly those who are budgeted several months into the future

     Sounds like a missed opportunity to me. I sure wouldn't keep a decent amount in checking, nor would I budget several months into the future.

    It seems you missed the OP's actual question:

    Cornflower Blue Packet said:
    I welcome any suggestions you can offer that may have been helpful to you in figuring out how to make sense of CCs in YNAB
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  • Ya'll have given me a few things to think about and try, thank you!

    Like 1
  • Honestly I think going back to debit cards is the way to go that way you never spend money you don't have in your checking account.  Granted I do use credit cards with my wife. What we have done to simplify our finances and make it easier to track in ynab is we closed down all our checking accounts and savings account and moved to an online only interest bearing checking account through Ally and we cut up all our credit cards except for one where we use for everything. When reconciling in ynab it makes it a million times easier because you just need to reconcile one credit card and one checking account. Going back to debit cards though I do think using them is the most simplistic approach.  If minimalizing isn't an option by using one checking and credit card then I think your method is probably the next best and figuring out what works for you is the most important in the end  

    Like
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 3 wk ago
      • 2
      • Reported - view

      Ynaber27 I do think it's the best approach when you're getting out of debt. But when used with YNAB correctly (using category balances to inform purchases), they are just a convenient tool that happen to give you extra money back.

      Like 2
      • Ynaber27
      • Auditor
      • desert_red_commander
      • 3 wk ago
      • 1
      • Reported - view

      Superbone yeah same here. If it wasn't for the way ynab handles credit cards we would only use debit cards to make purchases 

      Like 1
  • I'll throw in something I just learned about CCs that was throwing me off for a while - just in case it helps:

    I noticed that if I have a transaction that is inflow (dollars go back onto the card), and I mark the dollars as "Inflow: to be budgeted" instead of assigning a specific category for those dollars, that YNAB doesn't put them back in the regular "to be budgeted" bucket, but rather keeps it in the "available" pool of dollars for that credit card.   Over the months, the "available" balance would creep up and I was left scratching my head as to why.

    Now that I know that it does that, I either assign categories, or make manual adjustments and keep the "available" matching what is the balance on the card (and then pay it off before the month rolls).

    Like 1
  • Orange Flute yeah, inflows on the cc really throw me for a loop

    Ynaber27 i agree that going debit-only is WAY simpler, but i don't think our finances will ever be that simple again. when my wife and i first started dating in our 20s (and first started using ynab) our finances were way more straight-forward, but we have a lot more moving parts now, so i don't think it'll ever be that simple again.  and when you're in a position (as we are) to pay off the credit cards month to month, why not take the cash back?  not doing so is, in my mind, like passing up employer-matched 401 contributions: someone is offering to give you money, and you're saying "no thanks!"  that's a huge bummer (in my opinion.)

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  • I'm having the same problem as Cornflower Blue Packet  unraveling these credit cards.

    We moved house in January -lots of charges, lots of refunds, (some refunds from January, some from December showing up on the Jan statement)

    We were EXTREMELY careful, to input every transaction, after ensuring there was budget in the category.

    Yet somehow, we're $206.53 short, in the Payment Available bubble, versus the Working Balance.
    See screen shot below

    Anyone have any ideas on tracking down the source of this. I hate like he** just to dump money in to fix it, leaves me feeling uneasy about the entire CC process

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