How credit cards work

Credit cards work differently from cash accounts, and Budget Bandit handles them so the math stays honest. The short version: when you budget for something and then put it on a credit card, the money you budgeted moves to that card’s payment category, where it waits — safe to pay the bill. This is the funded-portion model. Only money you actually budgeted moves. Spending you did not budget for shows up as a shortfall, in red, so you can see it.

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The idea in one example

Say you have a Credit Card account and a Groceries category.

1. You assign $200 to Groceries.
2. You buy $80 of groceries on the credit card.
3. Groceries drops to $120 Available, the same as if you had paid with cash.
4. That $80 moves to the card's **Payment** category. It now reads$80 — that much of your card balance is funded and safe to pay.

You budgeted for the spending, so the dollars followed the purchase onto the card. When the statement comes, the Payment category already holds the money to cover what you charged.

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The Payment category

Every credit card has a Payment category, created for you when you add the card. You do not type money into it directly the way you fund Groceries. It fills as you spend on the card with budgeted money. The number in it answers one question: how much of this card’s balance is safe to pay right now. When you pay the card, you record a transfer from a cash account to the credit card, and the Payment category drops by what you paid. See Pay your card.

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When the Payment category goes red

If you spend on the card without budgeting for it first, there is no money to move. The purchase still hits the card balance, but the Payment category comes up short and shows red. Red means: you charged more than you funded, and you owe money the budget has not set aside. Fix it by assigning money to the category you overspent. Cover the overspending and the dollars flow onward to the Payment category automatically — the shortfall clears. See Payment category is red.

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Refunds and credits

A refund to the card, categorized to the same category as the original purchase, nets against that spending. The money flows back the same way it flowed out — no special steps. See Refunds and credits.

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Paying down existing debt

If you started with a balance on the card, that is debt to pay down over time, not spending you just budgeted for. Budget a monthly payment toward it like any other goal. The Debt Payoff report projects how long it takes and what interest costs. See Debt payoff.

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