How do I track a credit card purchase that I'm carrying a balance on?

I bought a laptop on an 18 month no interest deal. I made an envelope for it, but now it just shows a huge negative balance. The credit card is set up with an “interest saving balance” which includes all new purchases, plus the amount we’re paying toward the balance of the big purchase.

Seems kinda complex. Should I set up the big purchase as a separate account?

I don’t know that mine is the BEST solution, but I set my card up as if it were two separate credit cards–one that I continued to pay off each month, and one that carried the balance (albeit with no interest) until that amount was paid off. It works fine on the Envelope side but it did make it more difficult to reconcile my monthly statements, since I had “payments” going to both balances and the card total wasn’t split out that way. I’m not sure if there’s a better way though; I certainly couldn’t come up with one!

Hi Enoch,

If that credit card has zero interest, even if you’re carrying the balance, it might be fine to simply have it as a Credit Card Account in Goodbudget and run the negative balance until you pay it off.

Alternatively, you can use the method Tiffany’s suggested, or check out this article in our Help Center for more ideas.

I understand the concept, but I can’t click the right buttons to make it work. How, specifically, do you set up a separate debt account and reduce the amount in the credit card spending account by that amount? Currently, the balance of the debt account is doubled because it’s appearing in both accounts.

Hello Enoch, if you want to use a debt account to track this debt, then you’ll need to adjust your credit card balance by the amount that you’ll have in your debt account. Personally I wouldn’t recommend creating a debt account if this “borrowed” money is actually on a credit card. In my opinion it just creates more work and confusion. I would recommend what Alex said above in his first paragraph, “simply have it as a Credit Card Account in Goodbudget and run the negative balance until you pay it off.”

The reason why I wouldn’t create a separate account on that credit card is because now there’ll be two accounts that will reflect a single credit card account. Just not a good accounting practice.

As for the huge negative balance in your laptop envelope that’s a good thing because it actually shows reality. So what you’ll do is fill that envelope from each paycheck in the amount that will lower that negative balance to zero within the 18 months.

Just a side note on that 0% interest, if you were carrying a balance on that card before you used their 0% interest offer, many card companies apply your monthly payment towards the 0% interest amount, leaving the previous balance earning interest and not being paid down, which is not good for you, but great for the banks. Anyways, that may not be your case, but if you did have a previous balance, you’ll definitely want to read the fine print on how they allocate your monthly payment.

So if I have an envelope for the laptop purchase, the problem is that I’m transferring the CC payment from my bank account to the credit card. How do I make only part of that transfer count toward the laptop envelope? That’s really my hang up on the whole thing, is that I want to budget against the monthly payment on that balance. The rest of it is just the monthly spending balance that I pay in full, if that makes sense.

As you said, “transferring the CC payment from my bank account to the credit card,” this is the account transfer. You’re just transferring money from one account to the other, there are no envelopes involved. The laptop envelope first comes into play when you enter your CC purchase of the laptop. It sounds like you already did this because you mentioned the large negative balance in that envelope. When you created that envelope did you add the budget amount there? This is how you “budget against the monthly payment on that balance.”

Then when you do an envelope fill from your income the negative balance will continue to decrease.

Now, to try to answer your question directly, “How do I make only part of that transfer count toward the laptop envelope?” You can’t, as mentioned above, that’s an account transfer. I hope my above information clarifies that answer, but I also know this whole thing can be confusing, so continue to ask questions if you don’t understand.

I’ve been dealing with this a bit too. I haven’t tried this yet but I came up with an idea. Instead of showing a credit card that’s carrying a balance on it as a credit card account (which affects the allocation, overall balances, etc.), or instead of showing it as a debt account which seems to create a lot more work to balance everything and track purchases, why not show the credit card as a regular bank account but list the balance as whatever credit is available on it. For example, if you have a credit card with a limit of $2000.00 on it, you would set it up as a bank account with $2000.00 available to use. Every time a purchase is made with the credit card, it will lower the credit allowance remaining. For example, if you make a purchase of $500.00, the balance showing for the credit card would be $1500.00 available funds. Obviously, the goal would be to pay it off every month so that the available credit goes up (in this case you would aim for $2000.00 every month). However, if you must carry a balance on it, it will just show up as the balance of available funds left on the credit card. To make a payment on the card, therefore bringing the amount of available credit back up, you would simply transfer funds from one of your “real” bank accounts. If using this concept, you have to remember that your allocated funds INCLUDES whatever credit is available on your credit card. Any comments?

I see your point, but I’m afraid that for me (and probably a lot of folks who have found their way here) having that balance in Unallocated would make it very tempting to spend on credit rather than remaining within budget.
If the card is typically paid off monthly it would seem to make more sense to just set it up that way, and if a revolving purchase is necessary then add a paid-over-time “account” for that purchase alone.
As noted above, that’s not a great accounting practice (two account entries representing one account) but this isn’t really an accounting app so much as a management one.