Purchasing an item in euros

[Michael Hendry]

On 14 Jan 2014, at 17:48, Colin Law <clanlaw at gmail.com> wrote:

> On 14 January 2014 17:38, picosam <picosam at gmail.com> wrote:
>> Hello,
>> 
>> I have a credit card that I used today to purchase an item in euros instead
>> of US dollars. The credit card uses its own exchange rate, and charges me a
>> fixed fee for the transaction since it's in foreign currency.
>> 
>> How do I record this purchase?
> 
> This happens to me occasionally, when I am abroad on holiday for
> example.  As I have no need to record the details I just record it
> approximately in my own currency, guessing at the total cost, and
> putting the foreign currency price in the notes.  Then when the credit
> card statement comes in I correct the total.  If, however, you need to
> record it in gory detail then you will need an expense account for the
> transaction charge and will have to get into the multi-currency stuff
> in GnuCash to cope with the exchange rate.  Don't do that unless you
> really need to.

Agreed.

I usually enter the cost in foreign currency in brackets after the Description, and put in an estimated amount as a place-holder.

Once the credit card statement comes in, I correct the estimate while reconciling - the foreign currency amount in brackets helps me to match my version of the transaction with the credit card statement. If I needed to split the expense to record the transaction charge separately (as distinct from the cost of the item itself), I would do it at this point.

This way I’m less likely to overspend my credit limit, or suddenly find myself without enough cash in the bank to meet the credit card bill.

Of course, sometimes the credit card statement is waiting for me on my return from my travels, and I can put the correct figures in immediately.

Michael