When You Pay Your Card in Full
YNAB is designed to help you pay your credit card in full each month! If you're starting YNAB with enough cash in your accounts to pay the card off in full, here's how to get started.
Here are the three main steps:
- Setting Up a Paid in Full Credit Card in Your Budget
- Using a Credit Card for Day to Day Spending
- Sending Your Payment
Setting Up a Paid In Full Credit Card in Your Budget
If you're setting up a new credit card up from scratch and you want to pay it in full, be sure to assign some of your starting funds to cover your "pre-YNAB" starting balance on the card.
If you have an existing credit card account in YNAB that you're now wanting to pay in full, you'll skip this step and just make sure there's enough cash in the Credit Card Payment category to cover what you owe on the card, as you see below under Sending Your Payment.
After following the steps to add a new account, pick the Cover my entire balance option.
Next, you'll see a Credit Card Payment category for your credit card in your Budget. There will also be a yellow alert in that category, prompting you to budget for your Starting Balance. Assign the amount of your Starting Balance directly to the Credit Card Payment category, and your Available amount will update.
Using a Credit Card for Day to Day Spending
After you assign money directly to the Credit Card Payment category for your Starting Balance/ pre-YNAB debt, you'll now assign money for your current day to day expenses in your regular spending categories— not in the Credit Card Payment category. To say it another way, you'll assign funds for your current month spending to the spending categories. You'll assign funds for spending done in a previous month or before this budget directly to the Assigned column of the Credit Card Payment category.
As you spend on your credit card, the money you assigned to your spending category will automatically move to your Credit Card Payment category. Here, the money sits, waiting for you to make your next payment.
If you ever overspend with a credit card in any of your categories, there won't be enough money to move to cover the purchase, and you'll see a yellow credit overspending alert:
Sending Your Payment
If you are a paid in full credit card user, your Credit Card Payment category Available should always match the account balance owed. If it doesn’t, assign more to the category until it matches, like in the screenshot below:
What if Ready to Assign goes red?
If you aren’t able to assign enough for the full starting balance of your credit card and all of your current month's expenses with the cash in your accounts, you might be riding the credit card float.
When you set up your budget, you’ll see the account balance on the left, but the Payment amount won’t update automatically to cover that existing balance. Budgeting for the starting balance by assigning that money to the Credit Card Payment category lets your budget know that you plan to take some of the money you have right now and use it to pay off the Starting Balance on the card.
What if I pay the statement balance?
Can I keep paying only the statement balance? Does it matter when I pay my card? (like weekly or once a month on the 10th or at the beginning of the month..?)
Yes! You don’t have to actually pay the balance on the card down to zero. You can pay the statement balance and still consider yourself paid in full, as long as you have the money set aside to pay it off completely at any time. When you make a payment, it reduces what you owe on the card and the cash set aside to make your next payment. As long as those figures continue to match, you're all set to pay in full!