Credit Card Overspending on Mobile
Rigid budgets break, so we built YNAB to be flexible. The reality is that overspending happens for all of us—your budget is here to help you get back on track.
If you have general questions about covering overspending (or you're looking to know more about cash overspending), head over here. If credit overspending is what you're after, read on!
Funded vs. Non-Funded Spending
There are two types of spending in YNAB—funded and non-funded. That's true for spending with cash, and for spending with credit. Of course, YNAB is helping you plan for your credit card payments, so credit spending is handled a bit differently.
When you make a purchase on your credit card that's funded for (meaning, you've assigned enough dollars into the category you're spending from), dollars will move to your Credit Card Payment category—they'll sit there until you're ready to pay the bill. Let's say you have at least $100 available in your Groceries category, and you make a purchase on your credit card for $100.
Once you've entered that transaction in the account, $100 will move from the available amount in the Groceries category to your Credit Card Payment category. It will stay there, ready and waiting to make a payment on the card.
Non-Funded Spending (Overspending)
When you use your credit card to buy something and you haven't assigned funds to cover it and don't have enough money available in the spending category, dollars will not move to your Credit Card Payment category—you now owe more on the card than you have set aside to pay.
Let's look at a second purchase at Target—this time, there is no money available in the Clothing category when the transaction was entered. This creates credit overspending in the Clothing category and no money moved to the Credit Card Payment category for the payment:
Credit Card Payment Category Activity
You can also view more details within your Credit Card Payment category. Let's say that the balance on the card is $175:
But when we view the Credit Card Payment category, there is only $100 available for payment:
The Credit Card Payment category is underfunded, so let's check into this category a bit deeper!
Tap the Credit Card Payment category.
Tap Activity for the Month here:
In the Activity, we can see that $175 was spent on the card this month but only $100 of that was funded spending:
This means that we can only afford to pay $100, even though the balance on the card is $175, unless we cover the credit overspending in Clothing in the current month.
Overspending becomes Debt
Ideally, you'll move money to cover overspending in the month it happens. If you do, YNAB has your back—dollars will be moved to the Credit Card Payment category for your payment and you won't have a care in the world when your credit card statement arrives.
But what happens if you can't cover the overspending before the month ends? You've increased what you owe on the card without increasing the cash you have set aside to pay it by the same amount. You've essentially accrued newdebt.
When the month rolls over, categories with credit overspending reset to $0—you no longer need to assign money in those categories in the previous month to cover the purchase. Now you owe your credit card company money, and you need to budget for a higher payment. Assign funds directly to the Credit Card Payment category in the current month.
Once the Payment amount in the Credit Card Payment category matches what you need to pay—debt from previous overspending plus money for new budgeted purchases—you can confidently make your payment. Need a refresher on credit card payments? We've got you covered.