How do I record a CC purchase that's actually a transfer (gift card)?

Hello fellow YNAB-ers!  My first post and possibly a stupid question, so please go easy on me!

I have an American Express card that I use for purchases and pay off completely as I go along. Yesterday I saw a promotional offer on Amazon for a £6 credit to my account when adding £50 to my gift card balance. I bought the credit with my Amex, and created a new checking account called Amazon Gift Card and made a £50 transfer to it from my Amex. However, it was only after that I realised that this leaves a whole in my budget as my Amex account in YNAB is now showing the purchase *and* the transfer. Which is the best way to record this, I have no plans to spend £50 or so on Amazon yet so I can't buy something and fudge YNAB that way.

I've just hit my second anniversary of using YNAB and thought I knew all I needed to by now!

Thanks in advance.

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  • I think if you’d delete the purchase and only had the transfer left, all would be allright, wouldn’t it ?

    Like 1
  • Doh!  That was me overthinking things when the easiest, most obvious answer was as plain as anything.

     

    Thank you Powder Blue Pony !

    Like 1
      • Stejay
      • stejay
      • 9 mths ago
      • Reported - view

      Stejay Actually, no.  Where would I be taking the money from to cover the purchase?

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  • You bought the gift card with AMEX, that is a transaction against it and should have a category (Gift Card Purchase).  You then create a checking account for Amazon gift card and add the balance from the gift card as income to that account and categorize as TBB.  Budget the 50 TBB to the category used to make the purchase.  

    Like 1
      • dakinemaui
      • dakinemaui
      • 9 mths ago
      • 2
      • Reported - view

      ynaber2613 if adopting the view of a purchase, the GC increase is technically a refund. Instead of a starting account balance, just categorize an inflow transaction to the same category as the outflow.

      Since the net is $0, you can use any old category rather than creating a dedicated GC Purchase category. Of course, it's fine if you want the dedicated category, though.

      The only new money that should be categorized as TBB is the £6 credit, directly in the GC account.

      Stejay , compared to the transfer approach: this enters two categorized transactions (a purchase and a refund) vs a transfer (no category) & budget adjustment. Either works, so pick whichever matches your view of what happened.

      Like 2
      • ynaber2613
      • ynaber2613
      • 9 mths ago
      • Reported - view

      dakinemaui Actually it does make more sense to categorize the gift card increase as a refund, one less step and you do not want it to be treated as income. 

      I would probably favor the categorized purchase route though so you have a record of the purchase.  If one is to purchase a lot of gift cards it would be nice to look at the category and see how many you purchased.  The same gift card category can be used for any payment method to purchase the card.

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      • dakinemaui
      • dakinemaui
      • 9 mths ago
      • 1
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      ynaber2613 said:
      you do not want it to be treated as income

      *I* sure want the bonus (£6 in this case) to be income. That's money I didn't have before! I can look at the Income Report and see how much I earned for my effort. I treat CC purchase rewards the same way.

      FWIW, when doing the transfer approach, the "record of purchase" is the transfer itself.

      Like 1
      • ynaber2613
      • ynaber2613
      • 9 mths ago
      • 1
      • Reported - view

      dakinemaui I was actually agreeing with you that you do not want the $50 added to the gift card account categorized as TBB but rather should be applied as a refund to the original purchase category.  Of course the $6 should be categorized as TBB.

      As far as not having a categorized purchase for the gift card I do not agree.  I think it is better to reflect reality, the gift card purchase will show up as a purchase transaction on the credit card account.

      Like 1
  • Enter the $50 as a transfer from your credit card to the gift card account. $50 will then show up in your tbb which you will budget to the credit card payments category. Your credit card will show $50 of overspending which you will have to ignore 

    Like 4
  • There is no purchase as far as YNAB is concerned, because no money has left the budget. After the dust settles, you will have moved £50 between checking and the new gift card account. This is slightly complicated by the fact you temporarily incur debt during that process, but it's easily fixed.

    1. Ensure the new Amazon gift card account is listed under the Budget Account section on the left side of the screen. (Not a Tracking account.)

    2. Enter a transfer transaction between Amex and the gift card with no category.

    3. Again, you did incur debt, and unfortunately YNAB assumes that won't be paid off. You know differently, so adjust the plan accordingly: budget £50 to the Amex Payment category.

    Like 1
  • ynaber2613 said:
    As far as not having a categorized purchase for the gift card I do not agree.  I think it is better to reflect reality

    Depends on perception. I regard this as merely a change of location of my money. Much like moving from checking to my wallet, the physical form changes, sure, but I can still buy stuff with it. That *view* is described by a transfer. Money did not leave the boundary of the budget, so there was no "spending" (by definition).

    The other, equally valid perception is as you describe. You bought a "thing". You did not return it, though, but it is very convenient to view reality as having done so as such in the GC account.

    Yes, there is an outflow on the real-world account statement. Either of the above views yield the same outflow in YNAB, just with different Payees.

    I wouldn't say either perception of reality is more valid than the other. Glass half empty or half full? Yes. 🙂

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