Managing Credit Cards

Using a credit card in any budgeting software can be confusing, and Actual is no different. Of all the questions that are asked about budgeting, credit card usage is near the top of the list so don't feel bad if you're a little confused. We will try to walk through the process of using a credit card, paying a credit card, and carrying a balance on a credit card here.

I have made several purchases on my credit card. I enter these transactions just like every other transaction and make sure to choose the Credit Card account in the ledger. I also make sure that the correct category is chosen. You'll notice that the account balance is red and negative. Credit cards are debt, so our starting balance should be 0. Any transaction added to this account will spend money, therefore making the amount more negative. If you are first starting out with Actual, be sure to enter your current balance as a negative number for the starting balance.

Here is my budget. You'll see I only have 200 in my checking account, so I was only able to budget 200 this month. That's a problem because I overspent by 30.

I need to cover my overspending, so I change my budgeted amount for Food to 100. You'll see that my To Budget amount is now negative.

I will now use my Credit Card budget category to capture that overspending by adding the amount I need to borrow on the credit card to balance the budget. The To Budget number should be 0. I am planning on carrying a balance on this credit card now, so I remember to turn on the Rollover overspending option on this category. The ensures that I don't lose these dollars that I need to pay on my credit card next month.

I still need to pay that credit card bill though. I go to my checking account and add a new transaction. This time it's just a transfer between accounts. I can only afford 200 this month, so I move the 200 I have in my checking account to my credit card account.

Now my Credit Card account matches my Credit Card debt category. Next month that -30 will still be in my Credit Card debt category so I'm going to work extra hard to pay it off.