Heads up: this post contains affiliate links. If you click through them we may earn a small commission at no cost to you. We only recommend tools and services we've actually tried. Full disclosure →

Rocket Money auto-categorizes every transaction the moment it imports — but the algorithm isn't perfect, and sometimes the predefined categories don't match how you actually want to think about your money. This guide covers both common needs: re-categorizing an individual transaction (free, takes 5 seconds) and creating fully custom categories (Premium, takes a minute).

The single most important thing to know up front: creating custom categories requires Premium. Re-categorizing into existing categories is free for everyone. If you've been wondering why the New Category button isn't appearing on your screen, that's why.

Start Your Free Trial →

10M+ members · Owned by Rocket Companies (NYSE: RKT) · Bank connections via Plaid (read-only)

Verified workflow (from Rocket Money Help Center)

  1. Open the Rocket Money app (Premium required for custom categories).
  2. Open a transaction; tap to change its category if recategorizing.
  3. To create a new category: open category management and type the category name.
  4. Choose an icon and color.
  5. Choose Spend or Income.
  6. Choose the Category group: Expenses, Earnings, or Ignored.
  7. Save.

Premium required to create custom categories. The Category Review tool helps confirm or edit categories at scale.

Source: Rocket Money Help Center — verified May 2026

What's in this guide

Recategorize an existing transaction (free)

Per Rocket Money's Help Center: "Rocket Money will automatically categorize your transactions into our predefined categories once you have linked your bank accounts and credit cards to the app. Our algorithms are constantly improving but are not perfect."

Steps to re-categorize a single transaction (free for everyone):

  1. From the mobile app, navigate to the Transactions tab.
  2. Use the search bar to find the transaction you want to edit (or scroll to it).
  3. Tap the transaction. Below the transaction description, you'll see the current category.
  4. Tap the category to open the category picker.
  5. Select the correct category from the list. The change saves immediately.

The change applies to that single transaction. To make a similar change apply to all future transactions from the same merchant — that's a Transaction Rule, covered in How to Create Transaction Rules in Rocket Money.

A few practical notes:

  • Recategorizing one transaction doesn't auto-apply to others from the same merchant. You either edit each one, or create a rule.
  • The category picker is searchable. If you have many categories, type to filter rather than scroll.
  • Bills, transfers, and payments behave differently. Re-categorizing a credit-card payment as "Groceries" doesn't make sense (and the app handles it specially). See Working with Credit Card Payments and Transfers in Rocket Money for the right approach.

Create a custom category (Premium, mobile)

Per the Help Center: "Creating custom categories is currently available to Premium members."

Steps from the mobile app:

  1. Tap the Settings (⚙️) icon in the upper-left corner of the Dashboard.
  2. Select Categories and Rules.
  3. Tap New Category.
  4. Type the category name you'd like to set.
  5. Choose an icon and color to represent the category.
  6. Choose whether this category counts as spending or income.
  7. Select the Category Group: Expenses, Earnings, or Ignored.
  8. Tap Save.

The new category becomes available immediately, both for new transaction categorization and as an option in your budget setup.

Create a custom category (Premium, website)

Per the Help Center, the website flow is essentially identical:

  1. Click the Settings (⚙️) icon in the upper-left corner of the Dashboard.
  2. Select Categories.
  3. Click New Category.
  4. Type the category name; choose an icon, color, and whether it counts as spend or income; select the Category Group.
  5. Click Save.

The mobile menu is "Categories and Rules"; the website menu is just "Categories." Same destination.

Delete a custom category

Per the Help Center, you can delete a custom category at any time:

  1. Tap the Settings (⚙️) icon in the upper-left of the Dashboard.
  2. Select Categories and Rules.
  3. Tap the name of the category you want to delete.
  4. Tap Remove Category.

A few important caveats:

  • Default categories cannot be deleted — only custom ones you've created. The Help Center's deletion flow specifies "If you wish to remove a custom category from your budget."
  • Transactions categorized in a deleted category are usually re-assigned to a default category (typically Other). You may need to revisit those transactions if you want them in a specific bucket.
  • Budget categories tied to a deleted category will lose their reference. Re-set the budget category if needed.

If you're not sure whether a category is custom or default, the New Category and Remove Category buttons only show for custom ones — that's how you know.

Category groups: Expenses, Earnings, Ignored

When you create a custom category, you choose one of three groups. The choice affects how Rocket Money treats the transactions assigned to it.

Expenses. The default for spending categories — Groceries, Restaurants, Gas, etc. Counts toward your budget total. Subtracts from projected savings.

Earnings. Income categories — Salary, Side Income, Freelance, Refunds-as-income (some users), etc. Adds to monthly income calculations. Doesn't count against the budget.

Ignored. A bucket for transactions that should be excluded from both spending and income totals. Use cases:

  • Internal transfers between your own accounts (transferring from checking to savings).
  • Credit card payments (covered separately — see the comparative comments in Working with Credit Card Payments and Transfers).
  • Reimbursements that net to zero (you paid for a friend's coffee; they Venmo'd you back).

The Ignored group is the cleaner alternative to manually marking transactions as "ignored" one by one. If a category should always be ignored, set it as Ignored at the category level and every transaction in it is automatically excluded from totals.

For more on the ignore mechanic, see How to Ignore Transactions in Rocket Money.

On the free tier and want custom categories? Premium adds custom category creation. If your spending doesn't fit Rocket Money's defaults — pet expenses, side hustle income, hobby spending — Premium is where you get the flexibility.

See What Premium Adds →

When to make a custom category vs use a default

Premium users can create unlimited custom categories. That doesn't mean you should. A few principles for keeping the system useful:

Use a custom category when the default doesn't capture meaningful behavior. "Pets" — vet bills, pet food, grooming, boarding — are scattered across Other, Groceries, and Personal in Rocket Money's defaults. A custom Pets category centralizes them. That's worth it.

Don't use a custom category for one transaction. "Dinner with Sarah on March 14" doesn't need a category. Use a transaction tag instead — see How to Create and Apply Tags for Transactions.

Don't fragment defaults too finely. Splitting "Restaurants" into "Lunch" and "Dinner" and "Coffee" rarely changes behavior. The friction of categorizing every coffee transaction outweighs the analytical value.

Use Earnings categories for irregular income. If you have multiple income streams (salary, side hustle, royalty, dividends), separate Earnings categories make the cash-flow story clearer.

Use Ignored categories for systematic exclusions. Internal transfers, reimbursements, and double-billing scenarios that need to be excluded from totals are easier to handle as Ignored categories than as one-by-one transaction edits.

A reasonable target: 6-10 custom categories on top of Rocket Money's defaults. More than that is usually a sign of over-categorization.

How this compares to YNAB, Empower, and Monarch

Category management is one of the more meaningful differentiators across budgeting apps:

Rocket Money. Strong default categorization, free for everyone. Custom categories Premium-gated. The category-group concept (Expenses, Earnings, Ignored) is clean. Limited per-category configuration beyond name, icon, color, and group.

YNAB. Heavy customization. Categories live within Category Groups, can be reordered, hidden, and combined freely. Every paid YNAB user gets full custom categories — there's no free/paid split since YNAB is paid-only. Categories are first-class citizens in YNAB's zero-based model in a way they aren't in Rocket Money.

Empower. Categorization is functional but secondary to the investment-tracking focus. Custom categories supported but the UI is less polished than Rocket Money or YNAB.

Monarch. Best-in-class custom categories. Unlimited custom categories on the standard plan, plus rule-based categorization, category groups, sub-categories, and rollover support per category. Most flexible category model of the four. Costs $14.99/month or $99.99/year.

If category-level flexibility is your top priority, Monarch and YNAB are stronger choices than Rocket Money, regardless of tier. Rocket Money's strength is detection and reporting, not category architecture.

Try Rocket Money Free tier identifies recurring charges, helps you spot subscriptions to cancel, and includes bill negotiation (available to all users — Rocket Money charges a 35-60% success fee on first-year savings only when negotiation succeeds). Premium ($7-$14/month sliding scale) adds Smart Savings, Concierge cancellation help, real-time sync, and detailed credit-score reporting. Try Rocket Money →

FAQ

Why don't I see the "New Category" button? Because you're on the free tier. Custom category creation is Premium-only.

Will recategorizing this transaction recategorize all transactions from this merchant? No — recategorizing applies only to that one transaction. To apply categorization across all transactions from a merchant (past and future), create a Transaction Rule. See How to Create Transaction Rules in Rocket Money.

Can I rename a default category? No. Rocket Money's predefined categories can't be renamed or deleted — only custom ones. If you want a different name, create a custom category and use Transaction Rules to push transactions there.

Will my custom categories sync between mobile and website? Yes. Custom categories are tied to your Rocket Money account, not the device. They appear on both surfaces immediately.

What happens to my categorization if I unlink a bank? Per Rocket Money's documentation, unlinking a bank deletes all category edits and transaction edits associated with that bank. See How to Disconnect a Bank Account or Credit Card From Rocket Money for the data-loss details.

Can I bulk-recategorize all transactions from a merchant? Not directly via the recategorize flow — but Transaction Rules effectively do this. Set up a rule for the merchant; it applies retroactively (depending on the rule's settings) and forward-going.

How does Rocket Money's auto-categorization actually work? Auto-categorization runs on merchant name, transaction amount patterns, and historical user behavior across millions of transactions. It's accurate for well-known merchants but often misses small local businesses or ambiguous merchant strings. The fix is a one-time recategorization or a Transaction Rule.

Related reading:

Not financial, legal, or tax advice. We earn a commission if you sign up for Rocket Money through a link on this page; the price is the same. Every claim is verified against Rocket Money's official Help Center documentation and the December 12, 2025 Content Affiliate Talking Points where applicable.