Accounting for saving money to pay credit card monthly

[ED Antrobus]

Here's what I would recomend.  I've been doing this for a couple
months, and it works, as long as you are consisntent on it.  Open a
second checking account.  Whenever you use your credit card, write
yourself a check for that amount and deposit it in the second account.
 When the bill comes, send the payment from that account. A free
checking account with no minimum balance will work best for this
because you don't have to worry about a minimum balance.  If you have
online access to your accounts and can do free money transfers, it's
even better because you can save a trip to the bank.

This method requires a little more work, but your accounts will be accurate.

I prefer using my credit card to my debit card for everyday purchases,
also.  Not just because of the cash-back rewards, but also because my
credit card has fraud protection and my debit card doesn't.

ED

---------- Forwarded message ----------
From: Christopher Scott <wabe5 at yahoo.com>
To: gnucash-user at gnucash.org
Date: Wed, 12 Jan 2005 11:50:19 -0800 (PST)
Subject: Accounting for saving money to pay credit card monthly
Scenario:  I have a credit card that pays me "reward points" for each
dollar I spend.  I would, therefore, like to maximize the use of this
card.  However, I want to pay off the balance on a monthly basis.
Therefore, I want to be able to automatically account for money out of
my checking account so that I don't spend it on something else.

How do I account for this?

Example today:
                             DB      CR
liabilities:credit card:            $50.00
expenses:whatever:         $50.00

Going forward:

                             DB      CR
liabilities:credit card:            $50.00
expenses:whatever:         $50.00
assets:checking:                    $50.00
??? assets:hold?           $50.00

Is this correct?  What kind of account is this (still an asset account,
some sort of accounts/payable account, or something else)?

Thank you.

=====
--
Christopher Scott
wabe5 at yahoo.com

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