Splitting a credit card payment

[Michael Hendry]

On 23 Mar 2013, at 22:21, Liz <edodd at billiau.net> wrote:

> On Sat, 23 Mar 2013 17:09:39 -0500
> Mike or Penny Novack <stepbystepfarm at mtdata.com> wrote:
> 
>> donles wrote:
>> 
>>>  I don't itemize credit card payments.  The funds are drawn from my
>>> checking account which is reconciled monthly.  The payment is
>>> credited to Liabilities:Credit Card and I do not reconcile the
>>> category.
>>>  I started to pay my monthly cable bill by credit card and now I
>>> want to
>>> go back a few months and edit the credit card payment to account for
>>> the cable bill.  I have an expense category Expense:Utilities:Cable.
>>>  I can't visualize how to go about doing this.  Can anyone suggest
>>> what to
>>> do?
>>> Thanks
>>> 
>>> 
>>> 
>> You can't figure it out because you are confused how to enter  
>> transactions involving the credit card.
>> 
>> a) When you PAY the credit card bill that is a transaction involving 
>> just your checking account (asset) and the credit card (liability) 
>> perhaps split if you are paying interest (expense). WHAT the various 
>> expenses were that you paid by credit card not involved HERE (this 
>> transaction, dated when you write the check). That's because .......
>> 
>> b) When you get your credit card statement you see a list of charges
>> for a bunch of dates. ALL of these represent transactions to be
>> entered affecting the particular expense and the credit card (you
>> paid for this thing not with cash but by incurring a liability.
>> 
>> Does that make it clear?
> 
> 
> donles, what you will have to do is to split the credit card bill into
> (at least) two groups
> Expense:Utilities:Cable
> and
> Expense:Other
> 
> Really it is worthwhile to categorise all your expenses - even years
> later I recategorise things because I want more information out of the
> accounts.

As a private individual, I have been keeping accounts using Gnucash (and previously using TAS Books, before that Accountability, and before that a big blue book!) in order to manage my budget, but also to avoid nasty surprises when a big credit card bill comes in at the end of the month.

The budgeting side needs categories such as Insurance, Gas & Electricity, Motoring, Household repairs, general living expenses, Holidays etc., and I post credit card transactions as I incur the expenses. This way I don't (often!) exceed my credit limit, because I see the balance as I enter the transactions, and I can also detect fraudulent use of the credit card when I come to reconcile the credit card account with my version of events when the statement comes in.

On several occasions I've picked errors in credit card charges (particularly double charging for the same item), and on several more I've picked up fraudulent use, and I'm sure I'd have missed most of these if I hadn't reconciled the accounts.

Payments made from my current account, by cheque, standing order, direct debit or online I deal with as I write the cheque or make the online transaction, or automate the regular payments using Scheduled Transactions.

I would certainly agree with the Novacks that you should post your expenses in categories that are important to you as they occur - and think about what information you might like out of your accounts in future. For example, you might want to be able to separate Life Insurance from your Household Insurance and Pet Health Insurance at the end of the year - it's much easier to put these into separate categories as you pay the premiums rather than coming to a single list of Insurance payments later on, and have to separate them without the invoices in front of you.

Michael
 
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