Credit Card Buckets for Finance Charges???

[Dave]

Hello! I am wondering what everyone does for their finance charges. Do
you put them in a bucket or not? Technically, you wouldn't have to b/c
you are paying the charge and the payment at the same time. But I
could see the other side too.

What is the gist?

Thanks!

[Patrick Burleson]

I don't track my credit cards, but I do get monthly bank charges on my
checking account, and I charge those against a "Bank Charges" bucket.
As for finance charges, they do technically affect your credit card
balance, so not all your payment goes against the principal. It would
be hard to split out the charge every month.

To keep your card balance in line, you could create that finance
charge transaction and mark the transaction "Bucket Optional".

Others may have better ideas.

Patrick

[Karen]

Hi Dave... I have a "Bank Fees" bucket for all fees charged by the
banks including credit cards. I'm not sure why--they just make me
mad. :-)
Karen

[Kevin Hoctor]

Dave,

I assign bank charges to a Bank Charges bucket but not credit card
interest charges because they don't affect my cash flow.

Peace,

Kevin Hoctor
ke...@nothirst.com
No Thirst Software LLC
http://nothirst.com
http://kevinhoctor.blogspot.com

[Karen]

Kevin, this may be an insanely stupid question but why wouldn't credit
card
interest affect your cash flow? Where does the interest money come from
in the end?

Karen

[The Watkinson Family]

For me, it depends.... on my primary card that I use for almost all my
purchases and pay off every month, if I get an interest charge
(because of a cash advance or a late payment), I assign the interest
charge to a bucket. However, for loan accounts and credit cards I'm
paying off over time (and that I generally do not use to make new
purchases), I do not assign the interest to a bucket. These latter
accounts aren't part of my "cash flow." In other words, I did not
include the balances on these accounts in my starting cash flow and I
do not use the equity or credit in them to execute my spending plan.

For a credit card that is part of your cash flow/spending plan
(meaning you use it on a recurring basis to make purchases that you
account for in your spending plan), I think you could run into
problems if you do not assign the interest charge to a bucket. Over a
period of time (a long period it the interest amount is small, or
shorter if the interest amount is larger) if you didn't assign these
transactions to a bucket, you would think that you had more money than
you actually do.

Suppose you go through the year and you accumulate $500 worth of
interest charges on your credit card. If you don't assign these
interest charges to buckets, you reduce the cash you have available by
increasing the balance on your credit card without reducing the amount
of money in your buckets. This will create a $500 difference between
the cash you actually have on hand and the amount that your buckets
are telling you that you have. Given a long enough period of time, or
large enough interest charges, you could end up with a situation where
your cash available doesn't "cover" the amount in your buckets.

Grace to you,
Blair

[Kevin Hoctor]

Karen,

I just pay a flat amount each month to eliminate my credit card debt.
If you carry a balance, it's nearly impossible to separate principal
from interest because interest is charged on interest.

I don't use my cards anymore so all I care about is paying it off.

Peace,

Kevin Hoctor

No Thirst Software LLC
http://nothirst.com

Sent from my iPhone

[ciara belle]

i normally don't carry a balance... (that's just giving money away..)
but when there is interest it goes into the 'interest paid' bucket...
mortgage interest has its own bucket (since its tax deductible). any
charges the credit card bills me (annual fee etc) go in to bank
charges bucket. i use a credit card that pays extra money on my
mortgage (in lieu of points or cash back) - so far its made 3 extra
payments for me -- so i use it for everything and pay it off right
away (as this is all normal stuff like groceries and their for in the
spending plan).

ml

On Jun 10, 9:37 pm, Kevin Hoctor <ke...@nothirst.com> wrote:
> Karen,
>
> I just pay a flat amount each month to eliminate my credit card debt.  
> If you carry a balance, it's nearly impossible to separate principal  
> from interest because interest is charged on interest.
>
> I don't use my cards anymore so all I care about is paying it off.
>
> Peace,
>
> Kevin Hoctor

> No Thirst Software LLChttp://nothirst.com

[Druzyne]

> i use a credit card that pays extra money on my
> mortgage (in lieu of points or cash back) - so far its made 3 extra
> payments for me -- so i use it for everything and pay it off right
> away (as this is all normal stuff like groceries and their for in the
> spending plan).

That sounds like an incredible credit card - how have I not heard of
it? Who offers it?

[Betsy Grimm]

I don't know who the original poster banks with, but I have this type
of card with CitiBank. It pays 1% of purchases against my mortgage. We
charge just about everything on that card (and pay it off monthly).