What’s the Credit Card Float?? Why You’re On It + How to Beat It!

[@dalleenpente]

I can’t thanks YNAB enough for helping me to get out of decades of credit card float by finally create a budget.

[@YNABofficial]

Ah! Sylvain, we LOVE that!! It's hard work my friend, but so is anything else worth having. Congrats again! 🌻Hannah

[@kme06d]

I started ynab on the credit card float and now I'm a month ahead in my income. The program does work, but paying the minimum on your credit card rather than paying it off entirely sounds like a slippery slope. I always paid it off in full, but made sure to start setting aside money every month by cutting expenses (your "long" way) and eventually had enough saved up to get off the float. I don't think it's worth putting yourself in high interest debt just to get off the float. The float isn't a great place to be, but it's better than actually paying interest on your debt.

[@tfrizz2050]

If you’re using YNAB and making minimum payments, typically you’re also paying the interest so it won’t accumulate.

[@kme06d]

@@tfrizz2050 paying only the minimum means you'll incur interest on any unpaid amount. Paying only the statement balance won't incur interest, but it may not pay your card "in full". Maybe they meant to say "statement balance" instead of "minimum" in the video, but I doubt it. Either way, it's still debt. But paying interest on debt just to get some cash flow isn't a good idea.

[@McCrackenfamily]

One thing: if you have traditionally paid off your statement balance every month, but are still riding the credit card float, you may be able to still pay the statement balance every month while climbing out of the credit card float. How, you ask? Well, when you swipe your credit card, and use budgeted money to pay for a purchase, YNAB kicks the budgeted money up to the credit card payment category. If you start budgeting around your statement date, and if you make approximately the same amount in purchases every month, by the time the next statement date rolls around, you should have enough in your credit card payment category to pay the statement balance. Budget an extra sum to the credit card every month consistently, and, sooner rather than later, you won't be living on the credit card float any longer.

[@ksk881]

Even though I have always paid off my credit card in full every month, I have to admit that I have, on occasion, ridden the credit card float. Usually it was when I wanted something a bit more expensive than what I had in my checking account, but I knew that I had bonus money or an income tax refund that would arrive before the cc bill was due. One of the best things that YNAB did for me was teaching me how to get a month ahead. What a wonderful experience THAT is ! Now I am very slowly trying to get another month ahead, which is actually a little more difficult than getting one month ahead. Why ?? I just don't know, 😅 but I'm not riding the float anymore.

[@YNABofficial]

Oh gurl, I've been on the credit card float even after I knew what it was. It can be easy to slip into. It always starts with the "I'll just use my credit card this one time and make sure to pay it right back next month," but it never seems to happen that way. Congrats on getting a month+ ahead!! It really makes ALL the difference, not just in your savings but also the peace of mind it brings. So, so nice. 🌻Hannah

[@curefansc]

Wow, I've actually never thought about paying the minimums on my credit card in order to build up money in my categories. Simple, yet genius!

[@mikepawlikguitar]

Your entire mindset changes about credit cards once you use YNAB. Essentially, and quite literally, once you adopt the YNAB technique, you're only using money you ALREADY HAVE assigned to each category before swiping that CC. This is great to redeem your 1 or 2 percentage points in cash back, or travel miles, or whatever. Ya know. I find it both intriguing and amazing that, I, myself, as a CC user who always pays mine in full each month, was still using it in place of money I didn't already have assigned to those dollar jobs. Mind blowing stuff in this video, as always here 👌

[@YNABofficial]

Yes!! If you're referring to the budget before spending, YNAB makes it *literally impossible* to go into debt with credit cards. I love it. It has changed my ways and my whole entire life as a result 😂 🌻 Hannah

[@mikepawlikguitar]

@@YNABofficial yes for sure. And I'll stop spamming your channel now too 😂✌️

[@YNABofficial]

Ha! Oh no, we love it! Spam away!! 🌻 Hannah

[@Novjuly]

Yeah I realized I had a problem when I want able to pay off my credit card for two months in a row. But now I’m realizing I actually had a problem for two years and didn’t even know it

[@purple0hairstreak]

I fell off the YNAB wagon this past year or so after getting pregnant and having a baby (when I should have held on to YNAB even tighter instead of deciding I didn’t have the time for it-rookie mistake!) Aaaand… yep, I ended up on the credit card float. I was just starting to panic and after doing a fresh start and setting up my budget again, I was about to do the quick method. And then I ended up watching this video and realised I CAN do the slow method and my debt isn’t that high yet. Thanks for the reminder Hannah!

[@lisadillon7956]

This is so good, Hannah! We've realized for awhile that we are having this issue, but it is so helpful to have it explained and what to do next.

[@nosirrahm]

Hannah calling me out. I didn’t realize how much I was floating in the current month until this 34 day trial period. I have 9 over budget categories. 🤦🏽‍♀️ I thought I would start funding ahead starting in September, but I may start earlier. Note: I do have the ability to pay it in full right now, but I took the 3rd paycheck of April to fund some other things so the next paycheck falls late. I didn’t want to defund those categories to re-do it on the next paycheck. I know better now to plan it better. I’ll be happy when I’m fully a month ahead and won’t care.

[@YNABofficial]

Hey-learning is the best way to figure things out, even if sometimes it feels a little sticky or backwards! One of the biggest things a budget brings is awareness-I didn't even know I had half the spending problems I had until I finally started using a budget the way it was meant to be used. It was a hard season to trudge through and grow out of, but now that I'm out of the thick of it, my budget is one of my favorite things!! It gives me clarity, confidence, peace of mind, and even a hot latte :) 🌻Hannah

[@beejayhawn]

excellent explanation!

[@TehLeviter]

I was actually living off my future paycheck for a few years.... not anymore, paid it off last month I think.

[@JennyA]

I use the credit card float for everything but rent and water with my apt. Everything else gets put on the CC for the rewards, and I have them on auto pay. I keep the cash in a high yield savings account so I can get interest. I'm currently sitting at 27 days (age of money) which isn't that bad.

[@brette]

I love the outakes.

[@ann-karint.larsen7585]

"It's like borrowing a bok from the library, I have to return it in two weeks. It doesn't make it MY book just because I have it" That's how I'm going to describe it to my kids🥰

[@rorysparshott4223]

Also remember you can divide your credit cards. I have debt cards which I never add to but pay off over time, a rewards card that I use for every day spending that gets paid off no matter what, and a low rate card for purchases I've not had time to save for while using ynab for a couple of months

[@candy2325]

I didn’t budget enough for spending money so I made a quick run to grab some breakfast somewhere and my amount was $9.00 so now I’ll have to pay it back Friday. I get paid weekly so I know I’ll have the money, but I’m gonna have to budget more for spending so I don’t need to swipe my card

[@nicolem8599]

So this is helpful, I am still trying to contend with the interest I have ignored all those years carrying cc debts. It is a painful reality! I appreciate all the videos, support and endless communications. I am about to transition from free to being a paid subscriber. I am still learning, and setting goals of first stopping cc use, then build emergency fund, and only after we have accomplished that start putting a dent in our debts. I know right now I am in a retraining my brain mode.

[@YNABofficial]

Heyooooooo-you sound 110% on the right track! Super proud of you for taking the bull by the horns and going all in on your financial life! We try to put as many resources out there to help with as many different situations as we can think of, but if you ever have any questions feel free to hit me up in the comments here, or search youtube for a video on the topic! 🌻 Hannah

[@anaveragemuppet]

I’ve frozen my credit card because I can’t trust myself with it. I’m paying off as much as I can every payday (I get disability bemefits; some weekly, some fortnightly and some four weekly). I’m putting everything left over the day before each payday on the credit card. I’m due to be paid off my around Christmas if I continue as I am

[@amirgamil]

We're so on the float right now that we should probably setup camp and start a campfire. But we are also so planning to get off this float soon!

[@YNABofficial]

You've GOT this, Amir! I've been where you are, and you can TOTALLY break the cycle and put out that campfire 😎 🌻 Hannah

[@devlinfae]

Love this mindset.

[@georgetteetourneaux3350]

great info

[@trecinac4820]

So, just to clarify, pay min payments and use money to put towards my categories untill mostly funded then start on the cards?

[@williamwarren9448]

AHHH Hannah - you caught me - dang - I am always credit carding those extras and then pay days are painful because those credit card balances are HUGE -yes - i admit it - I do the credit card float and yes I need to use my budget power :)

[@YNABofficial]

Harness that budget power!! You got it!! 🦸🏽‍♂️ 🌻Hannah

[@mercyfae17]

Feeling this.

[@christypollock5874]

this is so interesting! literally me! right now I have 4 negative spending categories, and this video says to pay minimum on all cards. What do I do about these overspend? do I just ignore it and move forward ? so confused :(

[@PatJones82]

I was anxious about how to best, and FULLY explain credit cards to my child who will have his first soon. I am now less afraid because I will show him this video and then he (we) can move confidently forward knowing: "he heard it from Hannah". So helpful! Thanks! I think I love you! Not in a creepy kind of way, but in an admirable kind of way. If YNAB ever lets you get away they are ABSOLUTELY NUTS! ;)

[@YNABofficial]

Hahahaha, this comment made my day! SO glad this can help out a new credit card owner. Don't miss our latest "YNAB 101 for Teens" video too! If your child doesn't have a lot of expenses or bills yet, that video is a great way to help them learn YNAB while their responsibility level is still low. I'll link it for ya! kzbin.info/www/bejne/eJa9ZquXn7uXjtU 🌻 Hannah

[@PatJones82]

@@YNABofficial I’m glad I made your day. You deserve any and all Praise. You are soooo good at what you do! 👍. Thank you also for the info and link to the 101 for teens video. I’ll check it out! Very much appreciated!! 😀

[@YNABofficial]

Aww, thank you so much!! That's a GREAT confidence boost on a run-of-the-mill Tuesday morning! Appreciate it :) 🌻 Hannah

[@Not_Lewis]

I'm curious of YNAB's philosophy on using credit cards with 0 float. Meaning I have the money for everything I buy. I just swipe my card and next month when the statement rolls around I pay it off, using the income from the month those transactions occurred to do so.. I use my CC for pretty much 90% of my purchases (and the other 10% being fixed costs like rent, internet and my phone bill being paid as a bank account debit). For more than 5 years I've had credit cards (since I got my 1st in college) and I have not paid a single penny in interest on them. Plus fraud protection is a bonus.

[@YNABofficial]

Oh, we love it! My husband and I do it that way as well. The amount of things I've been able to purchase for FREE with credit card cash back is amazing. It's all about the budget! That's why we have a built-in credit card category whenever you add a credit card as an account-it *requires* you to borrow money from somewhere else in the budget to send to the credit card category, so you're only ever spending the money you have! 🌻 Hannah

[@mnorth1351]

@@YNABofficial So, to clarify, you manually pay all your credit cards every month? Because with automatic payments, there is usually not an option to pay the full current balance; only the statement balance, which is LAST months expenses. So, being truly debt free requires giving up the time savings of using automatic payments? Is that right? If so, that sucks.

[@rickdeckard4735]

@@mnorth1351 Time savings of.. 10 minutes a month? If even that.

[@YNABofficial]

No, we do have our credit card set up on auto pay! And we also have it set to pay the "statement balance", but we're never charged a late fee as we've always paid the full statement balance on time and in full. I think if you're still getting "caught up" on past credit card payments, there will be interest charged. But if you're positive you're all caught up and only paying the current statement balance, no late fees are acquired! 🌻 Hannah

[@Not_Lewis]

@@YNABofficial exactly. You have between the date the statement is issued and the due date to pay the full statement balance without accruing interest or late fees. You start running into trouble when you only pay the minimum amount or something less than the statement balance. I like to think of it as ~30 days of free credit.

[@cscreative5460]

This is me right now. However it’s due to a move and trying to settle in to a new home and a new budget. Everything is new now. I will get out of it and even have a projected date. However, I’m just glad we are paying in full and paying no interest.

[@YNABofficial]

Oh-big life transitions like that will almost always muddy up the budget in one way or another! Totally understandle! So many unforeseen (or just unthought-of) costs come with moving, so you're absolutely not alone in that. Congrats on paying no interest, though! That's HUGE and makes getting out of debt a lot easier and less stressful!! 🌻Hannah

[@Tiredmum]

I feel old. my grandma was born in 1930s lol

[@daftoptimist]

Oof. I got back on the float after moving out, and I completely forgot that paying only the minimum on my CC was an option. Also, my cats need toys but there are literally cardboard boxes and crumpled receipts. 😅

[@YNABofficial]

And milk jug caps and milk jug rings! Cats are so easy to entertain 😂 And honestly... it happens. Life and ebbs and flows and sometimes we find ourselves leaning on the float when we never meant to. It's okay! You can get off of it, I BELIEVE in you!! And I can only say that because I've done it myself and this girl LOVVVES to buy new things 😂 🌻 Hannah

[@OscartheChunk]

Oh Dear, I was like I'm going to watch this and pat myself on the back for not relying on my CC for everything. HA! Put in my place! So I have some ( READ A LOT) of work to do. Sigh.....

[@YNABofficial]

It's a sneaky float, ain't it?! But rest assured, you CAN use your credit card without being on the float!! Once I got off the credit card float, YNAB made it REALLY easy for me to still use my credit card for everything (gotta get that free cash back!) without ever being behind on my bill or relying on that next paycheck to pay off last months purchases! I use my credit card pretty much exclusively now and am saving like crazy! So you can absolutely do it!! 🌻 Hannah

[@Topofthegame08]

Help, I'm poor!

[@EmmaCOW93]

Now I just want a root beer float... 😒

[@YNABofficial]

Freaking same. 🍦🍻 🌻 Hannah

[@NettieFIRE]

Or another idea - pay double the minimum (if you can manage it) 😉 while you’re focusing on funding the other categories properly Think 🤔 …. do I really want to *rely* on the honesty 🤣 of the credit card companies telling me what is a ‘reasonable minimum’ amount to pay; remember their response is designed to make them profits, with the backing of legislation that includes a safety margin that favours the lender, not the borrower. Oh my 😮 😱! In Australia 🇦🇺 consumer advocate (I believe) played a bit part in helping to change the mindset on credit card debt. We have legislation which required credit card providers to include two (2) tailored calculations - on the *front* page of every credit card statement (paper or electronic) - which shows: 1. How long it will take to pay off the current credit card debt ‘closing balance shown’ and the TOTAL interest payable (for the whole timeframe, using current card IR) assuming, a) no more purchases are added to the credit card with, b) only the *minimum* credit card payment amount being paid. 2. How long it will take to pay off the current credit card debt ‘closing balance shown’ and the TOTAL interest payable (for the whole timeframe, using current card IR) assuming, a) no more purchase are added to the credit card with, b) simply *DOUBLE* the minimum credit card payment being paid. While the difference (time and interest payable) is staggering, the full load of interest paid over the term of the debt repayment (in both scenarios) is still front and centre. Even calculation 2 is criminal! I’m not sure if it’s the same elsewhere; 🇺🇸 or 🇨🇦 or 🇬🇧? (If it’s not, YNAB’s build in debt calculations are very helpful for showing all variety of debt payoff calculations; like a built in truth serum, if you dare to use it 💕).

[@ramilsadykov1894]

#Bob

[@Baoran]

I dont agree with this video. In either case you need to spend less than you earn so you can get rid of debt you already have. Logically not paying interest is the faster way to spend less than you earn because you are not spending money on interest also in addition to your other expenses. Paying minimum amount is same as increasing your expenses by the amount of interest you have to pay.