The Credit Card Float

Sometimes, when you get started in YNAB, it can reveal to you that you’ve been operating in the credit card float—waiting on money to come in so you can pay the credit card bill for past purchases. Technically you pay the statement balance off each month, but you have to wait for next month's income to cover last month's credit card spending.

The "float" is a term for any situation where you don't have enough money on hand to both pay your card in full and also budget for future spending. Even if you're a paid-in-full credit card user, you might be unknowingly riding the "float!" 😱

How do you know if you're on the float?

Can you pay the credit card off in full today and still budget for your future spending? If not, that’s the float. Here are some ways you can tell:

  • Your Credit Card Payment category Payment amount is lower than the account balance.
  • The balance of your checking account is lower than the balance on the credit card.
  • When you make a payment to the credit card, the Credit Card Payment category turns red.
  • You’re getting confused by the dates of the statement and of the due date. If you’re not on the float, those statement dates (from the 26th of the month to the 25th) hardly even matter to you at all.

Here's how you'll know that you're truly off the credit card float:

  • Your Credit Card Payment category Payment amount will match the debt in the left sidebar exactly:In the left-hand sidebar, the credit card's balance is -$570. The Credit Card Payment category has $570 Available for payment
  • You won't have any:
    • over-assigning (red in Ready To Assign in the current or a future month)
    • cash overspending (red categories)
    • or credit overspending (negative, yellow categories with a credit card symbol). 
  • Note that you don't need to have the entire month budgeted to be off the float! You can budget only for expenses that will come up before your next paycheck, then budget again when that paycheck comes in.

How do you get out of it?

If your recent payment has turned your Credit Card Payment category red, you'll need to resolve that first. Since that money is really gone, you'll want to find any available money in the Budget and move it to the Credit Card Payment category to fully fund the payment you already made and zero out the cash overspending. If you're not able to cover the red, YNAB will remove that amount from next month's Ready to Assign.

Once the Credit Card Payment figure is zero or positive, the next step is to recognize that you have debt and may not be able to pay the card off in full going forward. Commit to using the Credit Card Payment category to help you pay it off.

Assign money for your upcoming expenses and cover overspending. Prioritize cash spending and overspending first, then cover credit overspending if you have enough cash. If you've covered all your overspending and have money left over, assign some money to the Assigned column of the Credit Card Payment category. As you're working to get of the float, always check the Credit Card Payment category before you make a payment—this may mean that you need to turn off automatic payments to the card temporarily.

You’re taking back control of this process, and you’ll pay the bill based on what you have set aside in your budget. Once the cash in the Credit Card Payment category matches what you owe on the card, you're all set to pay in full and turn back on automatic payments.

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