How does My Little Accountant categorize transactions?

Free transactions start Uncategorized until you assign one of your custom categories, ask AI to categorize them within your included chat limit, or a saved rule matches. Underneath that label, Plaid metadata, account type and subtype, and amount direction still separate spending, income, refunds, transfers, and credit-card payments. Pro automatically uses the transaction name, merchant, similar transactions, existing rules, saved memory, and anything you told My Little Accountant during onboarding every night.

Account type and subtype help the assistant distinguish transfers from spending, income, loan payments, credit card payments, and account movement between checking, savings, brokerage, and credit accounts.

The same deterministic interpretation is used by transaction screens, spending and cash-flow totals, widgets, insights, goals, chats, GraphQL queries, and dashboards. Transfers and credit-card payments do not count as spending; refunds reduce spending; and income stays separate.

Older transactions whose saved money kind is unknown are reinterpreted from Plaid's primary and detailed category data plus the transaction amount before those totals are calculated. This does not assign a visible custom category; it only determines how the money movement should be counted.

When a transaction still has no custom category, built-in spending and income breakdowns use a clearly labeled estimate from the bank's transaction category instead of collapsing everything into one Uncategorized graph segment. The transaction itself remains Uncategorized until you or the assistant assigns one of your categories.

For peer-to-peer apps like Venmo, Zelle, Cash App, and PayPal, the assistant tries to categorize by the memo or counterparty instead of treating every payment as a transfer.

When a pattern is repeatable, My Little Accountant can create a categorization rule through AI chat so future matching transactions are handled automatically. For broader preferences that are not tied to a merchant rule, the assistant can save memory that helps with future answers. Free uses its included chat allowance; Pro includes unlimited chat plus the nightly AI run.

On mobile onboarding, the start-categorizing screen shows an animated preview before AI training begins and notes that the process can take 5-10 minutes, so users should start it when they have enough time to finish.

After a Free user upgrades to Pro and all transactions in the initial two-month window are categorized, the progress reaches 100% and immediately changes to a completion page instead of waiting for closing chat narration or opening Category Settings. Tap View my Finances to return directly to the Finances home screen.

If you tap Back during the mobile onboarding training chat, My Little Accountant saves the current transcript before returning to the intro screen so completed categorization work and the visible chat stay aligned.

If mobile onboarding is reopened during AI training, My Little Accountant asks the server to resume the training agent before showing the saved chat, so interrupted categorization can continue from the existing onboarding transcript.

During background categorization, My Little Accountant applies saved rules before asking Your Little Accountant to make remaining category decisions. Your Little Accountant also uses your existing rules and saved memory as guidance for new transactions. Background categorization runs quietly without a progress banner in Finances, so you can keep using the app while it finishes.

Nightly categorization runs are background operational activity, so they do not appear in your AI Chat history. Your normal conversations remain available there, while nightly transcripts stay available to My Little Accountant's admin and diagnostic tooling.

Large background backlogs keep only the current bounded transaction packet in the assistant's working context, so completed packet history is not repeatedly processed. If the nightly work limit is reached, any rows still uncategorized remain queued for a later background pass.

When you do not want to wait for the nightly pass, a pending-category transaction can open a chat that asks the assistant to start categorizing right away.

• Rules are best for merchant names, memos, and amount patterns.
• Memory is best for durable preferences, like how you think about reimbursements or side income.
• Free users can create and edit custom categories, assign them manually, and ask AI to categorize coherent batches or create rules within the included chat limit. Pro adds unattended nightly AI assignment.