The difference
- Spending is money leaving your budget for something you consumed (groceries, rent, subscriptions). It should be categorized.
- Transfers move money between your own accounts (checking → savings, checking → credit card). Transfers usually should not hit a spending category.
Common pitfall: categorizing a transfer
If you categorize a transfer as “Groceries” (or anything else), you can accidentally inflate Activity and make your budget look wrong. When something looks off, this is one of the first places to check.
Credit card payments should be transfers
When you pay your credit card bill, record it as a transfer from your bank account to your credit card account. The money should come from the card’s payment category (see How Credit Cards Work).
Refunds and reimbursements
A refund is not a transfer — it’s usually an inflow categorized back to the original category. That way, it correctly reverses Activity and restores Available.
Quick checklist
- If the transaction is between two of your accounts, it’s probably a transfer.
- If the transaction is a purchase from a merchant, it’s spending (categorize it).
- If you’re unsure why a category’s Activity looks high, open the Activity detail list and look for transfers.
Related
If you want the deeper “budget math” explanation: Assigned, Activity, Available.