Your credit card bill is not an expense: how to track card spending the right way
Counting both your card purchases and the bill you pay for them doubles your spending. Here is how to track credit cards, wallet top-ups and self transfers correctly.
Here's a mistake almost everyone makes when they start tracking money. You buy groceries for ₹3,000 on your credit card and record it. At the end of the month, ₹3,000 leaves your bank account to pay the card bill, and you record that too. Your tracker now says you spent ₹6,000. You spent ₹3,000.
Spending vs moving money
There are two kinds of money movement:
- Spending: money leaves you, for something you bought. Groceries, rent, a movie ticket.
- Transfers: money moves between your own accounts. It's still yours.
Common transfers that get mistaken for spending:
- Paying your credit card bill from your bank account
- Topping up a wallet like Amazon Pay, Paytm or PhonePe
- ATM withdrawals: bank to cash
- Moving money to your own savings account or FD
- Buying a gift card or voucher you'll spend later
If you count these as expenses, your totals double up, your budgets look blown when they aren't, and you can't tell where the money actually went.
The right way to track a credit card
- Record each card purchase as an expense on the day you buy, with its category. This is when you spent the money.
- Record the bill payment as a transfer from your bank account to the card. It reduces what you owe; it isn't new spending.
- Card fees, interest and late charges are expenses. They're the true cost of the card, so give them their own category.
- Card EMIs: the purchase is spending when you buy. The monthly EMI payments are repayments, except for any interest or processing fee.
Wallets and vouchers work the same way
Adding ₹2,000 to a wallet is a transfer. Spending ₹500 from the wallet on a cab is the expense. A ₹1,000 gift card is a transfer from your bank to the voucher; using it at the store is the expense, and the unused balance is still your money.
How Dhuddu handles it
The Dhuddu Android app has a separate Transfer type, alongside Expense and Income. When you add an entry, pick Transfer and choose where the money came from and where it went: bank account, credit card, wallet or cash. Transfers are marked as such in your list and left out of your spending, income and budgets.
You don't have to remember this every time. When you add an entry that looks like a card bill payment, wallet top-up, ATM withdrawal or self transfer, Dhuddu suggests marking it as a transfer. When you import a bank statement, on the app or the website, these rows are marked as transfers before you save them.
Set up your bank accounts, cards and wallets once under Accounts & cards, and your monthly numbers will finally match reality.