Credit card accounting¶
Card spending has two effects to keep separate: it uses a spending envelope and creates debt on the card. When cash is available to back the purchase, line-budget.com reserves that cash for payment.
A funded purchase and its payment¶
Suppose you have $1,000 in Chequing, $100 in Groceries, and no card debt. Record a $40 card purchase assigned to Groceries, then record a $40 card payment from Chequing.
| Amount | Before purchase | After purchase | After payment |
|---|---|---|---|
| Chequing balance | $1,000 | $1,000 | $960 |
| Groceries balance | $100 | $60 | $60 |
| Card ledger balance | $0 | -$40 | $0 |
| Card Owed | $0 | $40 | $0 |
| Ready to pay | $0 | $40 | $0 |
| Available funds | $900 | $900 | $900 |
The purchase moves $40 of assigned cash from its spending purpose into a card payment reserve. That cash does not become available for another purpose. The later payment reduces cash and debt together, using the reserve.
This is why recording the card payment as another $40 grocery expense would count the purchase twice.
When a purchase is only partly funded¶
Suppose Groceries contains $30 and a $50 card purchase is assigned to it. With no other card activity:
- The envelope balance becomes -$20.
- The card has $50 owed.
- $30 of the purchase is cash-backed.
- $20 remains without purchase funding.
A supported funding move into the envelope can repair that deficit and add cash backing to the outstanding charge. Money used to back debt must not also remain available as positive envelope cash.
You can also use Set aside money directly for the card. The breakdown shows direct reserves separately; these count in the top-level Ready to pay and Still to cover figures even when individual charges still show amounts without purchase funding.
Existing debt and direct reserves¶
An opening card balance of -$200 creates $200 owed and no payment reserve. Setting aside $75 from Available funds gives:
| Figure | Amount |
|---|---|
| Owed | $200 |
| Ready to pay | $75 |
| Still to cover | $125 |
| Reduction in Available funds | $75 |
The account balance stays -$200 until payment or other supported account activity changes it. Reserving cash is a planning action, not a payment.
Linked refunds¶
A linked refund reduces an original charge's outstanding amount. It cancels the unfunded part first, then releases any cash backing that is no longer needed.
For example, a $50 outstanding charge with $30 of cash backing has $20 unfunded. A $10 linked refund leaves $40 outstanding, $30 backed, and $10 unfunded. A $30 linked refund instead leaves $20 outstanding and releases $10 of the original backing to the spending envelope.
Select Refund on the original purchase to record a full or partial refund. Refund limits track the original purchase separately from payments, so paying the card does not remove the ability to refund a purchase.
If the source purchase has already been paid, the refund reduces other card debt. Any amount beyond the remaining debt becomes a positive card balance. For example, refunding a paid $40 purchase with no other debt restores $40 to its envelope and leaves $40 credit on the card. Your bank balance is unchanged. A later $50 purchase on that card uses the $40 credit and creates only $10 of new debt. Only that new debt needs cash reserved for payment.
See Use credit cards for the form and its limits.
Positive card balances and available funds¶
Positive card balances contribute prepaid spending value to the funds used by the nightly funding process. It does not mean that the credit can be spent from a bank account.
The current browser timeline uses a different starting calculation: bank and cash balances minus positive envelope balances and card reserves, without adding positive card balances. Left to plan, the Available funds forecast chart, and the available amounts shown in Move Funds and Set aside money use that browser calculation. They can therefore show less funding capacity than the nightly process has when a card has credit.
For example, start with $1,000 in Chequing and $100 in Groceries, make a funded $40 card purchase, and pay it. Chequing is now $960 and Groceries $60. A full refund restores Groceries to $100 and leaves $40 credit on the card. With no other activity or plans:
| Calculation | Amount |
|---|---|
| Nightly funding's available amount | $960 + $40 - $100 = $900 |
| Browser starting Available funds | $960 - $100 = $860 |
The $40 difference is prepaid card value, not a missing bank transaction. Check the card and bank ledgers before making a payment or relying on cash from a particular account.
Undoing a payment¶
Undo payment creates opposite entries in the original bank and card accounts. The correction uses the original payment date, with its creation time preserved for history. It does not delete or edit the original payment.
Outstanding purchases regain the principal and cash backing consumed by that payment. If later refunds have retired those purchases, they stay refunded; cash needed for other debt is restored as a direct card reserve. Reserves are capped by current debt, so a refund cannot leave cash reserved for debt that no longer exists. Excess cash is available for other plans. Envelope entries and later payments remain unchanged.
For example, a funded $40 purchase followed by a $40 payment has no card debt or payment reserve. Undoing that payment restores $40 to the bank ledger, $40 owed on the card, and $40 ready to pay. If the purchase was fully refunded after payment, undoing the payment instead removes the card's $40 credit; with no other spending, no payment reserve is needed.
Check the relationships¶
For ordinary card debt, the payment summary follows these rules:
- Owed is the magnitude of a negative card balance, or zero when the card balance is zero or positive.
- Ready to pay includes purchase backing and direct reserves, up to the amount owed.
- Still to cover equals Owed minus Ready to pay.
The payment form also checks the selected bank account's actual cash balance. Reserved cash is calculated across the budget; it does not guarantee that the particular bank account you choose contains enough to make the payment.
Continue with Projection rules and edge cases.