Repaying a Large Credit Card Balance

Let’s suppose you already have a large credit card balance (for example, $6,000) and you want to repay the debt over 12 months.


Setting Up the Existing Debt

If you are starting to use Pixel Budget now and already have this large credit card debt, set the starting balance of your credit card account to –$6,000.
Learn how to change the starting balance here:  ⁠⁠Changing Starting Balance⁠ 
If you have been using Pixel Budget for a while and all transactions that resulted in the –$6,000 balance are already recorded, then you don’t need to change the balance.


Example Repayment Plan

To repay a $6,000 debt in 12 months, you need to pay:
  • $500 principal each month
  • Plus interest
Example repayment schedule:
Month
Principal
Interest
Total
Month 1
$500
$120
$620
Month 2
$500
$110
$610
Month 3
$500
$100
$600
Month 4
$500
$90
$590
Month 5
$500
$80
$580
Month 6
$500
$70
$570
Month 7
$500
$60
$560
Month 8
$500
$50
$550
Month 9
$500
$40
$540
Month 10
$500
$30
$530
Month 11
$500
$20
$520
Month 12
$500
$10
$510
Total interest paid over 12 months: $780


Recording the Repayments (Accurate Method)

Each month:

1️⃣ Record the principal repayment

  • Transaction type: Transfer
  • Amount: $500
  • From Account: My Checking Account
  • To Account: My Credit Card


2️⃣ Record the interest payment

  • Transaction type: Expense
  • Amount: (the actual interest amount for that month, e.g. $120)
  • From Account: My Checking Account
  • Expense Category: Bank Expenses / Interest
This ensures that:
  • Your credit card balance decreases correctly
  • Interest is tracked as an expense
  • Reports remain accurate

If you are using Budgeting, you can allocate these amounts in advance on the Budgeting page:

After recording the $500 transfer and the $120 interest expense, you will see the updated values on the Budgeting page:


Simplified Method (Not Accounting-Accurate)

In the example above, principal and interest were handled separately.This is the most accurate approach from an accounting perspective.
However, managing two transactions and two budget items every month can feel tedious.
If you accept that you won’t track interest separately as an expense, you can simplify the process.


How the Simplified Method Works

In the example:
  • Original debt: –$6,000
  • Total interest over 12 months: $780
Instead of recording interest separately each month, include the total interest amount in the starting balance of the My Credit Card account: –$6,780.
Now, record only one transfer each month:
  • Transaction type: Transfer
  • Amount: $620 (principal + interest for that month)
  • From Account: My Checking Account
  • To Account: My Credit Card

If you are using budgeting, allocate the full $620 in advance for the repayment:

After recording the transfer, the balance will decrease accordingly:


Important

From an accounting perspective, this simplified approach is not fully accurate because:
  • Interest is not tracked as an expense
  • Reports will not show how much interest you actually paid
However, if simplicity is more important to you than detailed interest tracking, you may choose this method.