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# Article Sections:

How Credit Cards Work in the MoneyWise App __(Pro)__

I Have Two Credit Card Payment Transactions; What Should I Do?

Why Does My Credit Card Envelope Show a Negative Balance?

What if I Make a Big Purchase on My Credit Card That I Plan to Pay Off Over Time?

How do I Track Credit Card Transactions Manually?


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# How Credit Cards Work in the MoneyWise App

From a financial perspective, credit cards are a liability (debt) account. This means when you make a purchase on your credit card you technically won’t pay for it until you pay your credit card bill. This requires some special accounting treatment to make sure things are reconciled correctly in the MoneyWise app.

Additionally, we recommend using credit cards only if you are able to pay them off in full every month. If you are trying to pay off your credit cards, we still encourage you to connect them to the MoneyWise app, but we suggest that you not use them to make any new purchases until they are fully paid off.

## Here’s how it works:

When you connect a credit card to the MoneyWise app, an envelope for that credit card will automatically be created for you. For instance, if you connect your Wells Fargo credit card you will see a "Wells Fargo Credit Card’’ envelope appear under the Debt envelope group on your Envelopes & Plan screens.

When you make a purchase on your Wells Fargo credit card, the transaction will affect two envelopes in the MoneyWise app--the envelope you categorize the transaction into and the Wells Fargo Credit Card envelope.

__Here is an example:__ You spend $100 at the grocery store on your Wells Fargo credit card. When you see the transaction in the app, you assign it to your "Groceries" envelope. When you do this, the app will automatically increase the Wells Fargo credit card’s envelope by $100.

So now your “Groceries” envelope has $100 less, but your credit card envelope has $100 more.

Essentially, the app transferred the $100 from your “Groceries” envelope to the credit card envelope to ensure you have the money set aside when it comes time to pay your credit card bill.

The key point in this example is that the app does most of the work for you, so try not to overthink it. To put it simply, there is only one step you need to take when you see a credit card transaction: Categorize the transaction into the envelope that corresponds to the purchase and the app will take care of the rest.
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# I Have Two Credit Card Payment Transactions; What Should I Do?

If you pay the bill of a connected credit card with a checking account that’s also connected to the MoneyWise app, you will see two credit card payment transactions in the app.

One transaction will be in your checking account (a negative transaction) and the other will be in your credit card account (a positive transaction). These two transactions should be for the same amount with opposite signs, which means they offset one another.

Simply assign both payment transactions to the appropriate credit card's envelope and you are good to go!

By assigning your payments to the credit card envelope, you are indicating that the payment has been made. Your credit card transactions should have already been allocated to the appropriate envelopes (i.e., Groceries, Restaurants, and so on) throughout the month. Recording the payment(s) in the appropriate credit card's envelope allows the system to properly "balance" out.

# Why Does My Credit Card Envelope Show a Negative Balance?

Your credit card envelope may show a negative balance when you make a payment toward the credit card that was greater than the amount of funding you had in that envelope. This situation is most common when you first set up your credit card in the app and make a payment toward the credit card.

To balance it out, create a "One Time" fund in the credit card’s envelope equal to the credit card’s negative balance.

__For example:__ If your "Wells Fargo Credit Card" has a negative balance of $580, fund that envelope with $580 to balance it to $0.

__Please note:__ You may have to do this more than once, until the MoneyWise app includes all the transactions on your monthly credit card billing.

# What if I Make a Big Purchase on My Credit Card That I Plan to Pay Off Over Time?

If you aren’t able to pay off the purchase with the money you have available, we strongly encourage you to consider postponing the purchase until you do have enough money to pay for it in full. However, we completely understand that sometimes that is not possible (especially if it is an emergency).

If you are considering making a big purchase you don’t have the cash for, please consider posting a question in the Community. Other members can help think through possible solutions to avoid adding credit card debt.

If you make a purchase on your credit card and plan to pay it off over time, treat it like any other credit card transaction and assign it to the appropriate envelope. The difference is that it will make the envelope’s balance negative. The balance will remain in the negative until you are able to add enough funds over time to get it back to positive.

__Here’s an example:__ You put a $1,000 medical bill on your credit card. You assign the $1,000 transaction to your "Medical" envelope, which has only $500 available in it. $500 - $1,000 means your "Medical" envelope now has a -$500 balance. Moving forward, you will need to allocate funds to your "Medical" envelope until you are able to get the envelope back to at least $0.

# How do I Track Credit Card Transactions Manually?

In order to track your card manually you must first create a credit card account:

1. Go to the Accounts tab.
2. Click "+Manual Account" (web app) or "Manual" (mobile app) to create a manual account.
3. Add the credit card name, current balance, and select "Credit Card" as the account type.

Once you create the credit card account, an envelope tied to that account will automatically be created for you under the "Debt" grouping on your Envelopes and Plan tabs. When you make purchases with the credit card, simply create transactions and assign them to the appropriate envelopes (i.e., Groceries, Restaurants, and so on). Then the app will move funds from the assigned envelope into your credit card envelope, indicating the purchase was made but you have not yet "paid" for the transaction (which happens when you pay the credit card bill). Go back to the "How Credit Cards Work in the MoneyWise App" section of this guide to learn more.

When you pay your credit card, it will result in two transactions. One transaction will be a withdrawal from your checking account. The other will be a deposit transaction to your credit card envelope. These two offsetting transactions will both need to be assigned to the credit card's envelope. To check if this is done correctly, your credit card envelope balance should match the credit card's account balance.

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How Credit Cards Work in the MoneyWise App

MANAGE | Sep 11, 2021

How Credit Cards Work in the MoneyWise App

By: MoneyWise

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