Line of credit

[David T.]

Alan,

Both types of account are liabilities. 

When you use a credit card, you borrow money, which you would track with a transaction in that amount. Same with the line of credit. (e.g., $100 from CC/LOC into Checking)

The financial institution in both cases will charge you interest on the balance, which will be a transaction. (e.g., $5 from Interest to CC/LOC)
   (Note that the interest rate is immaterial to the accounting. You only need to know the amount of interest being charged.) 

Finally, you must pay back the balance for both accounts with a transaction from your assets. (e.g. $105 from Checking to CC/LOC)

Does that clear things up?

David

> On Sep 13, 2016, at 9:06 PM, Alan Schold <aschold at q.com> wrote:
> 
> The GnuCash Wiki suggests that I should use a credit card account to track a line-of-credit loan. With all the elements (outstanding balance, payment and interest rate) potentially changing could someone give me a few details on how to set up and use such an account? Thanks
> 
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