Credit cards for a newbie

I am new to YNAB and have yet to add my credit card accounts either linked or unlinked.  I tried but things got complicated. I get the gist of how this is supposed to work, but what about all the purchases from previous months where I was not using YNAB? Do I go back and add those so that all the transactions on the credit card bill are accounted for?  Any tips are appreciated.  I contacted my credit cards to change my statements to mostly cover a full month rather than ending in the middle like they do now.  I was think I would just wait until that all lined up better, but my credit card payments coming out of my checking account without the card linked seems like an issue also.  Thanks!

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  • I recommend you add them now.  It likely will never line up the way you think.  You do not have to enter those previous transactions.  If you intend to pay those prior purchases in full when the statement is due, you just need to assign the full amount of the balance when you start ynab in the credit card payment category 'assigned' column.   If you only intend to pay a portion of it, put the amount you intend to pay in the same place.

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  • Sky Blue Rhythm Welcome! I do recommend adding your credit cards to your budget, but you won't need to worry about entering all of those past spending transactions.

    If you have an outstanding balance on a credit card when you set it up in YNAB, and you plan to pay that in full, you’ll need to assign money for that starting balance in the Credit Card Payments category. That’s what lets the budget know you plan to take some of the money you have and use it to pay off that existing balance. 👍🏻

    Moving forward, your funded spending will move money into the Credit Card Payment category as you record it, like this: 

    I would definitely recommend signing up for our Manage Credit Cards and Eliminate Your Debt workshop to get a handle on this works! Of course, let us know how it's going here, too, and we'll make sure you're all set up and ready to rock and roll 👍🏻

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  • Thanks for your responses. I added them and so far so good. Nothing terrible happened.  How do you handle credit card payments?  They obviously offset as the money will go out of the checking account and be added to the credit card bill, but do you just delete them both (the addition of the money to the credit card and the subtraction of the money from the bank)?  Or do you assign both and if so to what? I didn’t see a credit card payments category or donU need to add that?  I really appreciate the help. 

  • Some really great answers here already, but I'll add a few thoughts for you:

    There are two pieces of the credit card puzzle that are important to recognize - what was previous debt vs what is current spending.

    As Rachel pointed out - if you have any balance at all on the card prior to setting it up in YNAB you will want to budget directly to the Credit Card Payment category for the amount you wish to pay. That is what will cover prior purchases.

    If you are unable to cover all of the amount, then you have debt. No if's, and's, or but's. Going forward you will need to add extra directly to the credit card payment category in order to make payments towards that debt so that you get it paid off.

    Any transactions that happen from now forward will get entered into the budget and categorized. YNAB will automatically move funds from the category up to your credit card payment category for you - no additional steps needed.

    The green number in the credit card payment category is the amount that you have available to pay on that card. If you were unable to cover an entire purchase with funds in that category you have 2 options; "WAM" it (whack a mole) and move funds from another category into the underfunded category, or leave it alone (it will show over spending in orange), and that amount becomes absorbed as debt. At the top of the account page for your credit card you will see the same number in green that you have available for your payment, but also the over spent total for the month (and that month alone).

    If you are carrying previous debt, or over spend and add to your debt, that amount will disappear into the 'balance' number at the end of the month. It's up to you to manage what you owe, and make appropriate payments on it.

    It doesn't really matter when the card payment is due, whenever is when you make the payment. Any payments that are made after that will just sit in the credit card payment category until the next month.

    Hope that helps, welcome to the YNAB family!

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