Credit card/overdraft credit limit & available funds?

[David Gillam]

Nothing I write here is meant to harm, impugn, or disrespect.  I apologize if what I wrote was taken in a negative way.  I read your initial query as a request for instructions to use the credit card (liability) account to track the ongoing "available funds" (asset) from which you could draw additional money.  I think that's where confusion began.

"Available funds/balance" is an asset.  Your checking account has some positive amount of money in it, which is the "available balance" in that asset account.  If you need to pay for something, you can use these funds to do so, and you don't owe anyone anything as a result.

"Available credit" on a credit card is not an asset.  It also is not (yet) a liability, nor is it an expense.  It is an amount the credit company is willing to further loan you, should you want to incur that additional liability.  If you need to pay for something, you can choose to incur additional liability, up to this amount, to do so.  You will then owe this money to the credit company.

I agree that it would be nice if GnuCash would have a field for "Credit Limit" on liability accounts, so that as you incur liability and pay back liability, the "available credit" can be tracked and displayed.  Unfortunately, it does not currently have this feature.

David
Gillam Data Services, Inc. - Computer Training, Consulting, & Service
dave at davegillam.com | www.davegillam.com



On Aug 26, 2012, at 7:59 PM, prl <prl at ozemail.com.au> wrote:

> I disagree about my motivation. I used the term "available funds" quite deliberately. My bank labels that information as "available balance" in my online banking access. I'm not sure why you seem to think that because I want to have GnuCash tell me how much more I can draw on a line of credit that I'm confusing liabilities and assets. I can assure you that my credit card accounts are set up as liabilities in GnuCash.
> 
> All I want is the ability for GnuCash to tell me the difference between the balance in my credit card account and some fixed limit. I can't see how that suggests confusion about what assets and liabilities are.
> 
> Using a tracking account as you suggest is probably a more flexible way of doing what I want than what I had in mind for it.
> 
> On 27/08/12 00:07, David Gillam wrote:
>> It seems to me that you're attempting to use a credit card as an asset account, when it's really a liability account.  Just because you have X amount of available credit doesn't mean you can call that X amount of additional assets.
>> 
>> On the other hand, tracking how much credit remains available is a GoodThing.  Unfortunately, I don't believe GnuCash has a "tracking" account type that can act in the way you want it--doesn't count as as an expense, liability, or asset, and doesn't affect the balancing of register entries.
>> 
> 
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