In Monarch, it’s important to understand how Transfers and credit card payments work — especially when it comes to keeping your budget accurate and avoiding double-counting your spending.
At a glance: Transfers move money between your accounts and don’t count toward your budget or spending totals.
What is a Transfer?
A Transfer in Monarch is when you move money from one of your accounts to another. Common examples include:
- Moving money from your checking account to your savings account.
- Paying off a credit card using money from your bank account.
Because these actions aren’t new spending — they’re just shifting money you already have — Transfers are excluded from your budget, cash flow, and spending totals.
Transfer Categories
You might see special categories in your “Transfers” group:
- Credit Card Payment: This can be used to specifically track credit card payments versus other types of transfers.
- Transfer: Used when generally moving money between accounts.
- If you have investment transactions turned on, Buy and Sell are also transfer categories.
All of these categories are excluded from your budget and spending totals.
Credit Card Charges and Payments in Monarch
Credit cards involve multiple transactions:
- The original purchase: When you place a charge on your credit card (like $50 at a gas station), Monarch tracks that original charge immediately as an expense.
- The payment: When you later pay your credit card bill (for example, you pay $50 towards your balance from your checking account to your credit card), Monarch treats this as a Credit Card Payment (transfer), not a new expense. This is true whether it's a partial payment or the entire balance.
Note: You may see two different payments associated with your credit card payment, both of which should be categorized with the Credit Card Payment category (transfer).
• The payment out of your bank account (usually appears as a debit)
• The payment into your credit card (usually appears as a credit)
Important: Monarch counts the original purchase as spending. Treating the credit card payment as a transfer ensures it’s not counted a second time. Otherwise, in the examples above, it would look like you spent $100 instead of $50!
Why Monarch Does It This Way
Monarch's budget feature is designed for expense tracking. That means it focuses on when you actually spend money — like when you swipe your card — not when you move cash around later.
Other budgeting methods sometimes focus more on tracking every dollar into and out of bank accounts. Monarch instead focuses on recording your true purchases and spending behavior, whether they happen with a credit card, debit card, or directly from your bank.
This method gives you a clearer picture of where your money really goes, without the confusion of double-counting transactions.
Frequently Asked Questions
I'm still confused. Can you explain more about why payments are transfers, and how it all affects my net worth?
The chart below may help explain further.
Phase 1: Before any spending
You have:
- Cash (Asset): +$100
- Credit Card (Liability): $0
- Net Worth: $100
Phase 2: You buy something for $100 on the credit card
You record an expense. Now:
- Cash: Still +$100 (hasn’t changed)
- Credit Card: –$100 (you owe $100)
- Expense: +$100 (this reduces net worth)
- Net Worth: $100 (cash) – $100 (liability) – $100 (expense) = –$100 change in net worth
You’ve consumed value: you have the item or service, but less wealth overall.
Phase 3: You pay the credit card with your checking account
You transfer $100 from your cash to pay off the liability:
- Cash: –$100 (asset down)
- Credit Card: +$100 (liability cleared)
- Expense: Still +$100
- Net Worth: $0 (cash) – $0 (liability) – $100 (expense) = –$100 overall
So even though both accounts (cash and credit card) are back to zero, your net worth didn’t “go back up.” That’s because the payment didn’t earn back any value; it just settled the debt for something you already consumed or used.
Paying off the card doesn’t erase the original expense; it only clears the liability.
The decrease in net worth came from the purchase itself (the expense), not from the debt or the payment.
Think of it like this:
The expense reduces your wealth (you spent money).
The liability and asset movements are just how that expense is financed and settled.