How credit cards work

Credit cards trip people up in every budget app, so here is Climb's whole model in one sentence: spending on a card is just spending, and paying the bill is just moving money.

Swiping the card

When you buy groceries with a credit card, log it exactly like a debit purchase: a transaction in the Groceries category. The envelope goes down, the card's balance goes further negative, and crucially, the money you budgeted for groceries is still sitting untouched in your checking account, spoken for.

That's the trick. Because every card purchase came out of an envelope, your budget is already holding the cash to pay the card back.

Paying the bill

The card payment is a transfer from checking to the credit card. It is not a spending transaction and needs no category. The spending already happened, in the envelopes, when you swiped. The payment just settles up.

If you gave the payment its own category too, you'd be budgeting for every purchase twice.

Debt from before you started budgeting

There's one exception. If the card already carried a balance when you added it, those dollars were spent before any envelope existed, so nothing in your budget backs them.

Climb turns that old balance into a payoff journey: it creates a Pre-Budget Debt category for the card, with a goal for the full amount. Money you budget into that category each month is your payoff plan, and paying it down works like funding any other envelope. When the goal is met, the journey ends and the card behaves like any ordinary account.

Carrying a balance

You don't have to pay the card off all at once. New spending that came out of an envelope is already backed by cash, so paying at least that much each statement keeps fresh purchases from becoming debt. Any older balance sits in the card's Pre-Budget Debt category and simply rolls forward until you're ready for it.

Carrying that balance doesn't freeze anything: you can budget toward the payoff goal and still fund and spend from every other envelope at the same time. The only real cost of taking your time is the interest the bank charges, so chip away as steadily as you can.

Interest and fees

When the bank charges interest or a fee, it lands on the card like any other transaction, and the rule is the same: it's just spending, and spending needs an envelope. Give it a category of its own; something like Interest and Fees under Monthly Bills works well. Charges you can see coming, like an annual fee, can keep using a sinking fund such as Annual Fees.

Don't log interest in the card's Pre-Budget Debt category. That category is a snapshot of the old balance, and its goal only ever counts down; interest is a fresh cost this month, paid from this month's money.

Once interest has a category, the What to pay this month helper on the card's logbook page counts it as new spending automatically, so the suggested payment already covers it.