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A
Anonymous
November 14, 2017
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Categorizing Credit Card Payments

  • November 14, 2017
  • 2 replies
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I have 2 credit cards. 1 for exclusively for Work, and 1 that is for mostly work but sometimes has larger personal things on it too. 

I pay off the Work card in installments each month, I am no longer using it to purchase anything, just paying off the balance.

The Mostly Work card I pay off in full each month. 

My question is: How should I be categorizing these payments in the Banking Section of my Quickbooks Online? 

    Best answer by qbteachmt

    Credit Card balances are Debt. The Balance you owe gets increased by entering Expense charges that you used that card for, already. The credit card purchases are individually entered, for the date you used that card to buy something. That is how your balance owed Increases.

     

    The balance goes down by the payments you make. A payment against a Card Balance is paying against that credit card type of liability account in your file, the same as ane debt payment is not expense but Liability payment.

     

    In other words, paying VISA or AMEX is a debt payment, it isn't the purchase of something. You didn't buy anything from them. They are Lender = the card provider for micro-loans.

    2 replies

    qbteachmt
    qbteachmtAnswer
    November 15, 2017

    Credit Card balances are Debt. The Balance you owe gets increased by entering Expense charges that you used that card for, already. The credit card purchases are individually entered, for the date you used that card to buy something. That is how your balance owed Increases.

     

    The balance goes down by the payments you make. A payment against a Card Balance is paying against that credit card type of liability account in your file, the same as ane debt payment is not expense but Liability payment.

     

    In other words, paying VISA or AMEX is a debt payment, it isn't the purchase of something. You didn't buy anything from them. They are Lender = the card provider for micro-loans.

    A
    Anonymous
    November 15, 2017

    That is a great, in depth, and helpful reply, thank you! 

    So in Quickbooks Online, should I just link my credit card through Banking and enter each expense? Or should I just enter the total payment to the credit card as a debt payment? Or do I do both? 

    qbteachmt
    qbteachmt
    November 15, 2017

    "should I just link my credit card through Banking and enter each expense?"

     

    Linked or not, the entry of an expense paid by Credit Card is similar to one paid from Checking (as paper or debit card); the difference is the Source of Funds. You didn't use your own money; you Charged it on that card.

     

    "Or should I just enter the total payment to the credit card as a debt payment?"

     

    The Payment is a Transfer, between checking and the credit card account. That way, they Both Go Down.

     

    "Or do I do both?"

     

    The first is the spending of someone else's funds by using their credit card they provided to you.

     

    The second is your Cash Flow as an expediture but not as an expense account entry.

      K
      karlanllc-gmail-
      August 13, 2022

      My business has changed banking institutions and need to change account that credit card payments get deposited to.

      L
      LeizylM
      August 13, 2022

      Good day, karlanllc-gmail-. 

       

      I've got you're back to help you change the payment account in QuickBooks Online (QBO). Here's how:

       

      1. Click the Gear icon.
      2. Select All Lists.
      3. On the Lists page, select Payment Methods.
      4. Click New on the Payment Methods page.
      5. Enter a name for the new payment method.
      6. Put a checkmark in the This is a credit card box.
      7. Click Save.

       

      I'm adding this article for more guidance: Add or modify the accepted credit card types in QuickBooks.

       

      You might also want to review all your sales and purchase transactions in the future. You can check out these articles for the detailed steps and information:

       

       

      That should do it! Fill me in if you have other questions about changing your payment account in QBO. I’m always here to help. Stay safe and have a good one.

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