Transfer

A transfer shows up twice, once on each account: the same amount leaves one and arrives in the other, on the same day or a few days apart. Nothing was bought and nothing was earned; a $400 deposit to savings and a $900 payment to a credit card leave you exactly as well off as you were the minute before. A transfer changes which account holds the money and nothing else, so income, spending and net worth are all the same after it as before. Each account's statement shows only its own side, which makes the outgoing half look like spending and the incoming half like income.

In a sentence

• "The $400 transfer to savings on payday is where the month's surplus went, not something we bought."
• "A credit card payment is a transfer: the $900 leaves checking and lands on the card, and the groceries it paid for were counted when they happened."
• "Rent is a payment, and the money is gone. Moving money to the bills account is a transfer, and the money is still yours."

How it works

Three questions sort a transaction into a transfer or not.

1. Do you own both accounts? Checking, savings, a credit card, a brokerage or retirement account, a second checking account kept for bills. A friend's or a landlord's is not.
2. Does the same amount appear on both sides? Out of one account and into the other, within a few days, since a bank transfer can take one to three business days to arrive.
3. Was anything bought? If not, the money is still yours, only somewhere else.

Yes, yes and no is a transfer. Anything else is income or spending.

The credit card payment is the case people get wrong: a card balance is money you owe, so paying it moves money from an account you own to a balance you owe, and the purchases it settles were spending on the days they happened. The ATM withdrawal is the other exception: the cash is still yours, but the purchases made with it are never seen, so it is counted as spending on the day it is withdrawn.

An example

One month, one checking account, one savings account, one credit card.

Counting the two transfers as spending puts the month's outgo at $4,560 and reads it as $160 in the red. Leaving them out, the month kept $1,140, and the balances agree: checking rose by $990, savings by $400, and the card's balance rose by $250 because the month's purchases exceeded the payment, and $990 plus $400 minus $250 is $1,140.

Why it matters

Transfers are the reason a month can look overspent when it was not. A card payment counted as spending puts every purchase on the card into the month twice, once when it was bought and once when it was paid, and a savings deposit counted as spending makes the month's saving look like its largest expense. The opposite mistake is quieter: leaving the card out of the records to avoid the double count loses every purchase on it. Sorting the transfers out is what makes the cash flow figure trustworthy, and it is what makes saving visible, since the deposit to savings is where a positive month went.

Transfer versus a payment

A payment sends money to someone else; a transfer keeps it within your own accounts. Rent, a utility bill and a loan payment are payments, and the money is gone from your possession, so they are spending. A credit card payment is called a payment and is a transfer, because the card's balance is yours to owe and the purchases it settles were already counted on their dates. The test is whether money left your possession or moved within it. See How to stop credit card payments and transfers from double-counting for a month sorted line by line.

Common questions

Is a credit card payment a transfer or an expense? A transfer. The expense was each purchase on the card, on the day it happened; the payment moves money from checking to the card's balance and settles spending that was already counted.

Does a transfer change my net worth? No. A deposit to savings moves an amount from one asset to another, and a card payment lowers an asset and a liability by the same amount. Net worth is the same after either; only the balances that make it up have moved. See Net worth.

Is a loan payment a transfer? Not in the budget or in cash flow. The principal part of a loan payment leaves net worth unchanged, like a card payment, but nothing about the loan was counted when the money was borrowed, so the payment is the month's cost of it and counts as spending. A card payment differs because the purchases it settles were counted on their dates.

Is sending money to a friend a transfer? Only if the account is yours. Paying a friend your share of a dinner is spending, in the dinner's category, and a friend paying you back is a repayment that offsets the expense rather than income. See How to handle reimbursements and money people pay you back.

Go deeper

• How to stop credit card payments and transfers from double-counting sorts a month's lines into spending and movements, with the wrong list and the right list side by side.
• How to calculate your monthly cash flow runs the subtraction with transfers left out, step by step.
• How to settle up shared expenses once a month replaces dozens of small payments between two people with one settling transfer at month end.

Where it shows up in Zypper

Zypper recognizes both sides of a transfer. When money moves between your own accounts, a card payment or a savings transfer, both sides show up as transactions and Zypper links them automatically as one transfer, not income and spending, so they do not distort your cash flow; a pair linked in error can be unlinked from the transaction's details. On the cash flow page, movements between your own accounts do not count as income or spending by default, and the page's settings let you choose how transfers are treated. See Splitting and linking transactions and Cash flow for the details, or get started with Zypper to see your transfers counted once.