I ran into this issue today and Googled it and came to this thread.

I used the method as described by Tandy , however, one problem came up.

How do I account for paying the credit card in full at the end of the month?

So:

1) My TBB is zero as I've already assigned every dollar to work.

2) I bought a GC with my CC.  I entered a $100 transaction in the CC account, with the category being "Clearing."  I'm now overspent in CC by $100, and am negative in "Clearing" category.

3) I created a new GC account (Cash) with starting balance of zero.

4) I entered a deposit in the new GC account with a $100 inflow.  This created a $100 balance in TBB.  I moved this $100 from TBB to the "Clearing" category.  The CC account now is no longer overspent since $100 was "budgeted" to it.

All of this worked great.  However, where does the $100 actually come from when it's time to pay the CC?  

So I realized that I was missing a step.  In my outlined scenario, I'm missing step 1.5, which should be:

"1.5) Transfer $100 from checking to CC"

This accounts for the entire cashflow.  If 1.5 wasn't completed, when I go pay off the CC at the end of the month, I may not have enough to pay from bank, especially if I have funds spread across multiple accounts, all of which make up my overall budget.

Hope this helps others on how to account for buying GC with CC.

kage2o Hi!  I followed your steps on a new blank budget and get to a slightly different outcome than how my method works.  The biggest obstacle I'm seeing is that I'm left with no funds to actually budget.  My accounts end up at -100 for Credit Card and +100 for Gift Card so they net to no value, but I do have 100 Payment available for Credit Card (green circle) in Budget area.  But what budget category do I now log my coffee purchases against?  I think the issue stems from you advising to start with zero TBB in step 1.

My method says you need to start with say 100 TBB available so you actually have some value to transfer and ultimately budget into a non-Credit Card category (i.e. Starbucks Expense).  So starting with 100 TBB instead of 0 TBB and following your steps (but not step 1.5...yet) works more like I would want:  I have -100 in my CC, +100 in my GC, and +100 in my Checking.  On the Budget side I have 100 available in my CC Payment and 100 available in my Starbucks Expense category (ultimately where the 100 starting TBB is moved to) that I will spend my GC against.

I guess ultimately it doesn't matter, but in the case of Starbucks specifically, since I can only use that GC at Starbucks, I like to have a budget category with an Available amount that ties to the Starbucks GC/App account balance.  It prevents that money from looking like it's available to budget for other expenses which of course it can't cover.

Couple other thoughts:  your step 4 should be done in one step instead of the two you describe.  Instead of entering it first as a $100 Inflow To Be Budgeted, then moving it to the Clearing category, just put the 100 in the Inflow column directly against the Clearing category using the Gift Card account.  This keeps that 100 off of the Reports as income (which it is not).  As you know, any money coming through Inflow to Be Budgeted shows as Income on Reports.

Finally I agree with step 1.5 in principle, but I just enter it whenever the Credit Card statement with that particular transaction eventually becomes due.  In our method the 100 is already showing Available in the green circle for the Credit Card (the whole reason for doing this convoluted method in the first place), so the money is there waiting to do its job of paying off that transaction on the Credit Card.  Labeling it step 1.5 implies you have to do this before you even purchase the GC, which isn't true.  Plus I would only input in YNAB the transfer from Checking to Credit Card when I actually perform that transaction with the bank.  Are you really prepaying your CC before you purchase a GC on it?

I think we're generally aligned but just wanted to highlight a few of the things that confused me in your post.  Best of luck and glad you can now leverage YNAB to double and even triple dip on rewards points by "safely" using CCs to buy GCs.  Using this approach I get points for 1) cash back from credit card for buying the GC on credit 2) grocery store rewards (i.e. fuel rewards) for buying the GC from them 3) Starbucks points for using their app to buy coffee (loaded via the GC I bought on credit at a grocery store)

So I'm  now noticing (and this is unusual for me to see because all my credit cards are paid in full every month) that my Discover Card shows "Overspending" in orange on the account page. I'm still messing with the best way to handle these gift cards.

frozenveggies This is not an issue with gift cards, it's an issue with how nYNAB treats credit cards.  In particular, nYNAB assumes you intend to create new credit card debt in situations where many users do not intend to do so.  If you pay all your cards in full every month, you can sidestep the entire dance of having to force the card payment category to equal the card balance by telling nYNAB the card is really a checking account.  This does a few things:

1.  The card payment category is eliminated.  That's okay, because you're just going to pay the statement balance anyway, and you know that number.

2.  The negative balance of the checking account that really represents a credit card reduces the the total amount you have to budget, so all your other categories can stay at the same level they were when you were budgeting a card payment category equal to the card balance.

The best advice I've seen for getting there is, a) rename your card account, e.g. "MasterCard Old".  b) create a new checking account, e.g. "MasterCard"  c) select all transactions in "MasterCard Old" and move them to "MasterCard"  d) wait for quite a while for the system to process this.

I am appalled at the amount of effort people need to make to ensure that the card payment category for a PIF CC matches the account balance.  IMO, it's much better to use that time and mental effort for real budgeting issues instead of having to focus on manually ensuring that the redundant card payment category matches the card balance.

This doesn't help people whose cards are not PIF; some of them are going to be accumulating more debt in YNAB than they intended to, absent watching the tricky details and deliberately correcting to eliminate debt they didn't intend to accumulate.

frozenveggies Rather than doing a single "Transfer" transaction from the Credit Card to the Gift Card, break it up into two transactions using a "clearing" category as described in my 5 step post further above.  This method has been working quite well for me the past several weeks, but I agree the intuitive approach is to enter this transaction as a Transfer, so it would be nice for it to work that way natively.

I too have implemented the cc masquerading as a chequing account methodology in my budget. I set up my paid-in-full credit cards as chequing accounts. YNAB doesn't like it, of course, and if I right-click on my account it shows me a warning because I have a chequing account in the negative, but I can ignore the warning as it doesn't create all sorts of self-cancelling steps in my budget for me to go through.

I would not recommend it for a new YNABer who is carrying cc debt.  I am very debt-averse and pay my entire balance in full at the end of each month (two weeks before my due date) just so that I can start every month owing absolutely nothing. I didn't need YNAB going into conniptions over every cc-to-giftcard-account transfer as if I was in imminent peril of taking on permanent cc debt.

I ended up using this CC/"checking" method for the one Discover card I talked about. Depending on how it goes I may end up doing this for other cards, but so far it seems to have helped with the one gift card problem.

Moki 

I use my chequing account to buy the bulk of my gift cards, so for my situation it really is a cash transfer from chequing to the gift card account. I have one small coffee drive-thru card that I reload using my cc online, $40/month, for the convenience of not having to go into the shop to reload it. Since I've told YNAB my cc is a chequing account, I just enter a transfer from my cc to my coffee gc account.

Assuming you want to create a Starbucks account, and that your credit cards are defined as credit cards:  when you use a credit card account to purchase the gift card, you enter a transfer from cc to gc. However, because you are transfering value and not assigning a category, YNAB treats this like a cash advance from your credit card and increases the TBB by the amount of the transfer.  At this point, you must manually budget the TBB amount to the cc payment for the credit card.

Not everyone wants to track every coffee purchase. They could just as easily consider the purchase of the Starbucks card a one-time purchase (under their restaurant category) and not bother entering a transaction every time they used the Starbucks card. They can use the Starbucks card separate from the budget and only record another transaction when they need to reload the card again.

Moki You'll find when you transfer money from Credit Card to Gift Card in 1 transaction, both balances are updated correctly in "Accounts", but the Credit Card budget category does not automatically increment by the transfer amount.  This is very noticeable if you pay your Credit Card in full each month and aren't on the "float", such that the Account balance normally equals the Budget category amount.  After doing this transaction, the two numbers will no longer automatically match.  So this entire thread is about ways of working around this observation.  All methods mentioned above work and it really comes down to which will work best for you given the level of detail you're wanting to track and the automatic functionality you're willing to give up.