How to categorize spending on credit card when you use your CC everyday
Newbie here. How would you set up your cc category if you use it for all your daily spending (we earn the airline points) and then pay it off with your cash. It is showing up as double in our budget.
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If you set up your cc as an on-budget account (left hand side of your screen), there is nothing else to set up. When you make a purchase on your cc, YNAB automatically moves those dollars from grocery category to the credit card payments category, which is located at the top of your budget. It will show a green number. Those dollars are there for you to make payment on your cc.
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Gold Harp is right on!
When you create a credit card account, a category is automatically created for your credit card payments. Here’s a video explaining the two ways money gets into your credit card payment category:
- When you purchase something you budgeted for and use a credit card, we call that budgeted spending. Dollars from budgeted spending on a credit card will automatically be moved from the category where you budgeted them (like groceries) to your credit card payment category. Your grocery Available goes down by $70, your credit card payments Available goes up by $70.
- When you budget additional dollars to your credit card payment to pay down that balance even more. They'll be added to the dollars that got there via budgeted spending. For example – budgeting for the starting balance on the card.
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 budget for it 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.
No matter which way dollars get into your Credit Card Payments category, the amount Available is your payment. Here’s an article that covers making credit card payments in detail.
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I found credit cards hardest to understand, but once I got it, boom. Ynab has been 10 times as good as it was before.
What do you mean by "showing up double"?
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Hey there - tagging onto this thread. I'm not sure if it's a bug or if we are just totally dense when it comes to understanding how cc budgeting/payments work, but our numbers somehow always seem to be off in the cc category. I understand how budgeted spending works with a cc (and I can see the balance in my budgeted categories, like groceries, going down when we make grocery purchases on the cc). I also understand how the numbers on the lefthand column are supposed to correspond to the budgeted cc amounts on the right (or at least I think I do... that is, the negative balance in red on the left should match the available balance in green on the right until we pay it off, when both numbers should land at zero, right?) But what we are really having trouble with is getting the payment column (on the right) to actually match the negative balance of spending (on the left). The numbers on the left generally match up to the unpaid balance that is actually on our credit cards. But the numbers in the cc category on the right are almost always wonky, and seemingly unrelated to our actual spending. Sorry for the novel; this problem is hard even to articulate! So appreciate any guidance you might have. For now, we've been manually adjusting the balance category to get to zero when our cc is paid off, or (worse) just ignoring the confusing numbers in the cc category. Thanks!
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Ashley Dunasta
1) Did you ever budget for the starting balance on your credit card?
2) There are reasons that the Available column can become off from the CC balance:
- starting balance on a paid-in-full card - category is lower
- overspending - category is lower
- uncategorized transactions - category is lower
- outgoing transfers to other on-budget accounts (e.g., gift card account, mixed funding splits) - category is lower
- purchase/cash-back rewards (should be categorized to TBB) - category is higher
- categorizing item returns as TBB (should use the original spending category instead) - category is higher
- reconciliation adjustment - category is lower for an outflow adjustment, higher for an inflow adjustment
- taking the account balance positive - category should be $0 in this case
To correct the problem, budget whatever is needed to make them agree. Some of them can also be fixed other ways (e.g., overspending).
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