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 FaithFi 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 FaithFi 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 FaithFi 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 FaithFi 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.