Understanding the Credit Card Mechanics

Budgetwise handles credit credit cards as simple as possible, but the process behind it can seem complex for a first-time user.  The total credit card workflow can be summed up into four steps:

  1. Budget money into a category like you normally would
  2. If you paid with your credit card, enter a transaction in that card's account page, selecting the category you budgeted for.
  3. The category will show activity reflecting your purchase, and your credit card balance (and Amount Due  column) will go up by that same amount since you've basically increased the debt on it.  
  4. When you pay your credit card bill, you can log it as a transfer from whatever account you are paying it from.  The money you had budgeted for the category can now be used to pay off the balance increase.

An Example Workflow

So let's say we only have one category, and one credit card. Our screen might look something like this:

We have a Groceries  category with $50.00 budgeted towards it.  We also have a Capital One  credit card with $25 budgeted towards it to cover our minimum payment.  Now you've purchased your groceries, but you've used your credit card. So let's enter the transaction in our Capital One's Account page.

We've entered the transaction how we normally would. The category Groceries  was chosen, and our total outflow came out to $50.00. If we go back to the Budget page and see our categories, we will now see:

Our Groceries  category reflects the money being spent, showing that $50.00 was spent and there is nothing remaining. On the other hand, our Capital One  credit card category shows an increase in activity for $50.00, and now the last column (Amount Due ) is $75.00. Now that $50.00 that you had set aside to spend on groceries, just put it towards the card instead to cover the debt you've accumulated on it.

Did this answer your question?