Credit Card Basics on Mobile

The most important thing about using credit cards in your budget has nothing to do with credit cards. 

It's this: In YNAB, you'll make spending decisions based on your categories. Is there enough money in your Clothing category for the shirt you want? Great. That has nothing to do with payment method, but it's your rock, your anchor.

So how are credit cards different?

When you spend money on a credit card, you create a little bit of debt. You owe the money. Did you buy that shirt or a $0.35 pack of gum? Debt. 

The important thing is that you reserve the money to pay off that debt, and that is what your YNAB budget is designed to do. Let's walk through an example using the Groceries category. 

How the Credit Card Payment Category Works with Funded Spending

  1. When you add a credit card to YNAB, a Credit Card Payment category is automatically created. ✅
  2. You'll budget for your groceries (using money you already have!) by assigning money to your Groceries category. Let's say you have $400 Available for the month. 
  3. When you use your credit card to buy those groceries (let's say you spent $70), enter a spending transaction in your credit card account. 
  4. When you do this, you'll see that the money to cover the purchase will move from that spending category to your Credit Card Payment category — automatically. The $70 spent from the Groceries category (using the credit card) now lives in the Credit Card Payment category.
  5. 70 dollars has moved from the grocery category's Available amount to the Credit Card Payment category's Available amount
    In the image above, we started with $400 Assigned to Groceries (and Available to Spend). After the $70 was spent from the Groceries category using the credit card, that $70 moved right up to the Credit Card Payment category.
  6. Now, your money stays there in the Credit Card Payment category. Twiddling its thumbs. Waiting to make your payment.
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