Karena Kreger Here's a quick video I made for you! Hopefully that helps. Let me know if you have any questions!

And I use my credit cards the same way you're describing, but fundamentally those two things are different (credit and cash spending). With cash spending that money is gone...gone forever, once the transaction posts. With credit spending though, you owe the bank some money, but it doesn't actually change how much cash you have on hand. In other words, the bank doesn't go in and debit your checking account for you. You have to choose when to make that payment, and only then, is that money out of your hands. In theory, you can keep owing money to the bank with credit spending and never be dime poorer. Obviously, you would never do that!! :)

Dan at YNAB  I am in the same boat as Karena Kreger   The video does help in that I had no idea that I should be checking in those areas for category overspending on our credit card.  I started under the old YNAB so getting used to the the way credit/category overspending is still proving difficult.  I just wish there was a more obvious, in your face, way that YNAB could notify you of this overspending when the month rolls over.  I loved the 'carry over into the next month' option of the old YNAB. That way when I went to budget our 1st of the month paycheck, I knew immediately that I either had to move money around from a different category to cover overspending, or I had to pull it out of the incoming funds.  Or when I or my husband entered a forgotten transaction and dated it for the previous month, it would pull from the the available category funds of the new month if the previous month did not have enough $ in it.  

 We live debt free (YAY!) and want to stay that way, but the other day I was searching for an old transaction and noticed some orange and a red in previous months.  Unknowingly, over the course of the year, we had accumulated an $800 debt!  Because of the way we use our credit card there is always a high balance and it rarely gets paid down to $0.  And because I wasn't checking the areas that you showed in your video, I had no idea this debt was slowly growing!

I understand the reasoning behind why this was changed, I've read and watched a bunch of videos on this trying to get it figured out.   But I wish there was an alert option that popped up when you login, something to the effect of "Did you know you have overspending from last month?"

Magenta Drill Thanks for the feedback on ways we could improve how we budget with credit cards now! I'll be sure to put some of these suggestions before our design team so we can find ways to make budgeting with credit cards a little easier. I especially like the thought of some clearer notification about overspending that spans across months. Great food for thought!

Dan at YNAB Thank you Dan! I had to watch a few times to try and track with this. Finally I realized that b/c my cc statements arrive a month after spending and then we just pay them in full, and because I didn't realize that the previous month yellow categories could hang around and be so hidden in the new months, I found out we are in credit card debt by $1300. That makes me crazy mad. I went all the way back to the beginning of using YNAB and zeroed out all yellow categories to try to sense out of it and see what we actually owe/have. So it seems we've been looking at inaccurate numbers for years because of the delay between spending and paying the statement off.  We're going to have to eat it this month to get us back to ground zero and I gotta figure out if I can trust the tool enough (and if i'm using it right) to continue this year. I love YNAB but the color coding thing is so confusing. From a UX perspective (thats what I do ) the overage category should be a different color or outlined or something FOREVER until cleaned up. Or something equally obvious. That line of text you pointed out is helpful if you click on that credit payment category (which I also didn't know was there) but confusing and until your video (THANK YOU!) I never even noticed it.

Karena Kreger I have my credit card set up as a checking account. I miss out on the YNAB calculation of payments, but since we pay them in full that doesn't bother me. When the credit card is set up as a checking account, all my overspending gets treated the same way and there's nowhere for it to hide. 

Karena Kreger While I'm glad that you've gained a little more clarity, I'm really feeling for the clean up process. I'll give that feedback to our team so we can look to making this a little clearer going forward. Thanks for your help!!

lebdavidson2 Thanks something to consider... Does it still pull the feed from the credit card directly?

Karena Kreger I'm not sure. I don't link directly to my credit card account. If you want to check it, maybe make a separate play budget just to see how importing a credit card you told YNAB was a checking account works. I'm guessing (and hoping) that the data would import just fine, since they can direct connect checking accounts. My way of doing it is NOT the current ynab recommended way, so I wouldn't expect support to be able to help with the hack. YNAB Pro (many moons ago) taught me to handle my credit cards as no different from cash spending. Although what Dan at YNAB says is completely true, my budget workflow works better for me when there's no difference between credit card and checking account spending. 

Dan at YNAB  Hello Dan, it looks like the link to the video is no longer working, could you re-post it?

Dan at YNAB To clarify - I'm not sure what to do and what YNAB should look like when I accrue more debt that I can't pay off immediately, per the above example with gas. I'm also not sure how to handle interest/fees - I have a category for it, which then gets put on my credit card, but I can't afford to be paying this off every month. How do I tell YNAB to just let the interest get added to my balance without budgeting for it?

I was late paying a credit card bill this month because YNAB said I didn't have the money for it - turns out, because I don't fully understand how to handle credit cards in YNAB, I had the money all along and didn't need to wait for more income to make a payment. I have to ensure this never happens again; if I can't trust what I'm seeing in YNAB, I'd be better off not having a budget at all, which is clearly a poor alternative.

Kenny S. If you overspend on a credit card and intend to convert it to debt, you can handle that one of two ways.

1) leave the overspending in the category. The category will have a yellow warning, not red.

2) Make the warning go away, by unbudgeting money from the credit card payment category and budgeting it to the overspent category.

Both of these will have the same net effect of your credit card balance increasing by the amount of the purchase, but the credit card payment (category) amount not increasing. Your carried debt is the difference between the two amounts.

nolesrule There's an example of where the confusion stems from: "If you overspend on a credit card and intend to convert it to debt..." I'm using a credit card - that's automatically debt. It's money that I don't have being borrowed from someone else. In my mind, there's no conversion necessary.

Regarding your advice:

1) Because I have my accounts linked and import transactions, YNAB automatically does stuff with the Interest/Fees that I don't understand. Also, which category are you suggesting I leave the overspending in?

2) To what warning are you referring? The orange balance on the right? I'm afraid I'm completely lost.

I understand the rules of YNAB, but the way the software itself looks at debt makes me feel like I need an MA in Philosophy. I've taken every class YNAB offers on debt, and while it makes sense in the simple, confined examples of the class, it all falls apart when I try to apply that knowledge to my real budget.

Kenny S. I suggest you sign up and take YNAB's course on credit cards. It'll give you better understanding of how their credit card system works. YNAB is an amazing tool, but you need to read the documentation and/or take the classes to learn how to really use it.

When I say "intend to convert it into debt", that means carried debt... a purchase you make purposefully intending to not pay it off when the payment is due.

I have been using credit cards for so long that I don't consider a budgeted purchase on a credit card as debt, because I know the cash is sitting in my bank account waiting for me to just pay for it. I only consider it debt if I don't have the money to pay it back. YNAB allows you to see the difference between those two kinds of purchases on the budget screen.

I can't help you with Interest and Fees. Yes, YNAB sets it up a certain way by default, but you can use whatever category you want for those charges, like any other recorded expense.

nolesrule As previously mentioned, I've taken all the classes YNAB offers on credit cards, as well as most of the others. Still utterly baffled.

I think part of the problem is that people who have their finances under control (good on you!) are the ones giving most of the advice. Not to say you've never experienced financial hardship, but as you said yourself, you have a completely different mentality. A few years ago, when I was using YNAB 4 and mostly had my money handled, the credit card thing didn't bother me too much, because it wasn't such a big part of my financial world. Even the program, itself, is designed with the idea of keeping people out of debt and discouraging them from getting more. This is a very good thing, but I imagine a large portion of the people using YNAB are doing so because, like me, they specifically don't have their finances in order. As it stands, YNAB makes me feel punished for buying gas or food on a credit card when times are tough enough to require it.

Perhaps the methodology behind how credit cards are handled by the software should be QA'd by people with extensive credit card debt? To be fair, it may well have been, but it doesn't feel that way at the moment.

Kenny S. What exactly makes you feel punished?  Maybe that can help us answer the underlying technical problem you are having, because CC handling in YNAB is just a mechanic.

Kenny S. I made a quick video to see if I can illustrate the options for you and how that credit card would work in the particular scenario you painted! Let me know if you have any questions!

The short version: If you know you're not going to have enough cash for your credit spending, then when you get paid the following month, you'll want to make a decision on whether or not to cover last month's overspending. Whatever amount you can afford, budget that straight to the Credit Card Payment category. 

Hey Spring Green Pegasus , I think the best would be to show you in your own budget! I'll reach out to you via email to see if we can iron out all the questions you have about credit cards!

Hi Ivory Panther !

We've made a few changes to the Available column in the web app. There are now icons there to indicate credit overspending or the type of goal attached to a category. You'll still need to budget directly towards the credit card category in a future month if you don't cover credit overspending in the current month. The biggest point is to check your credit card category Available amount before making a credit card payment. If there isn't enough to make the payment you plan to, budget more towards that category to raise the Available amount and cover the payment. :)

To learn more about how credit cards work in YNAB, take a look at our Quick Start Guide to Credit Cards and consider taking our Master Credit Cards with your Budget workshop!