Cash Back Rewards

Fri Mar 17 13:22:00 EDT 2017

Certainly, you can use your groceries expense account for rebates. I might
consider using a special contra subaccount for the rebates, though, which
would make it easier to keep track of the rebates as a separate item, and
would make it easier for you to move them around should you change your
mind later. I would do something like this:

Expenses:Food (placeholder account to hold the following two)
Expenses:Food:Groceries (all your normal grocery expenses go here)
Expenses:Food:Grocery Rebate (contra account; all rebates go here)

That arrangement gives maximum flexibility and a lot of information. It's
easy to answer the following questions by looking on the chart of accounts:
How much did I spend on groceries? How much did I obtain in rebates? What
was the net grocery expense?

On 17 March 2017 at 11:00, Leo Bolta <lbolta at rogers.com> wrote:

> Generally, I don't allow CC debt to creep up and am quite diligent to pay
> off the total bill each month but on rare occasions there can be an
> oversight and I'll get dinged with an interest charge.  I only have a
> single CC and it happens to be issued under the brand of a grocery store
> chain, so accumulated points are redeemed almost exclusively for plain old
> practical groceries at the point of purchase.
>
> In my world then (as you suggest in your explanation), I could get away
> with simply debiting my Grocery Expense account for these redemptions.
> Expensing it into a single account also keeps better track of the true
> accumulating dollars expensed in that category, whether I paid hard earned
> cash for it or not.  As you also point out, charging a single account (if
> appropriate), would be much less complex than allocating a single purchase
> into a multiple split transaction.
>
> Since I only have one CC to my name, crediting that cards interest charges
> account with redemptions purchases would yield a negative interest charge
> value by years end, since I generally fully pay my bills on time.  I'm not
> sure of (and maybe don't even care) about standard accounting practices but
> as long as I understand and can interpret a negative number representing my
> year end 'interest charge' result.  So, unless there is a correction from
> someone more knowledgable, I'll likely carry out this make-shift method...
>
> ------------------------------
> *From:* edward.doolittle at gmail.com [mailto:edward.doolittle at gmail.com]
> *Sent:* March-17-17 1:30 AM
> *To:* Leo Bolta; 'Les'; 'John Ralls'
>
> *Cc:* 'GNU Cash User'
> *Subject:* RE: Cash Back Rewards
>
> I’m a novice too, but this is my take on things. I always appreciate
> correction from those more knowledgeable.
>
>
>
> It certainly makes sense to put the entire rebate credit into a single
> expense account, instead of wasting hours of time attaching portions of the
> rebate to the expenses on which they were earned (e.g., 2% of that fuel
> purchase, 1% of that twinkie in the gas station variety store, or was that
> 0.5% on the first $3000 worth of twinkies etc., or 1% before $3000 then
> 0.5% after $3000? I can’t remember) which is what John said previously in
> this thread.
>
>
>
> Where it goes in the Expense tree is up to you, and your accountant if you
> have one, if s/he has an opinion on the matter. Putting it in a contra
> account beside the interest sounds like a good choice to me. However, if
> one is in the ideal position of paying no credit card interest, then there
> would be no interest to compare the rebates against. Personally I put the
> rebate credits in a single Expenses:Rebates:Credit Card account similar to
> what John does, but it might be interesting to break it down by credit
> card. Another scenario: if you only use your credit card for fuel, say,
> then it might make more sense to associate the rebate more closely with
> fuel. There is flexibility in your choice of account because there’s no
> external account to reconcile against.
>
>
>
> (Some cards have the additional complication of tracking “points”. You can
> keep track of the points by setting up a commodity for that purpose, but
> for me that’s going too far. I just account for the rebate when it turns
> into something useful for me. Others do keep track of their points,
> however.)
>
>
>
> The debit side is more straightforward: it should go wherever the rebate
> actually shows up. For example, one of my credit cards can dump points
> redemption right into the CC account, so that’s where the debit goes in my
> accounting. (I also have the option of buying blenders and coffee makers
> and other garbage, which is kind of mind-bending from an accounting
> perspective: the debit would go straight back to expense, kind of like a
> virtual particle in particle physics. Money appears and disappears
> immediately and I now have a blender, like Hawking radiation from a black
> hole. I have succumbed to the temptation of ordering such crud on occasion,
> but then I don’t even bother accounting for it, because the transaction
> basically nets to zero immediately.)
>
>
>
> On the other hand, I get store credit with my Costco card, so when I use
> the rebate to partially pay for a mixed assortment of junk I buy there I
> get a magnificent multi-split transaction that rivals my pay cheque in
> complexity, e.g.,
>
>
>
> Expenses:Rebate:CC Cr. $100
>
> Liabilities:Credit Cards:MasterCard Cr. $27.50
>
> Expenses:Groceries Dr. $47.50
>
> Expenses:Art:BlackVelvetPaintings Dr. $30
>
> Expenses:Clothes Dr. $25
>
> Expenses:Entertainment:MovieVouchers Dr. $25
>
>
>
> In this example, there isn’t really an “other side” to the rebate credit;
> there is no debit of $100.
>
>
>
> E
>
>
>
> Sent from Mail <https://go.microsoft.com/fwlink/?LinkId=550986> for
> Windows 10
>
>
>
> *From: *Leo Bolta <lbolta at rogers.com>
> *Sent: *March 16, 2017 7:30 PM
> *To: *'Les' <lelliott5 at gmail.com>; 'Edward Doolittle'
> <edward.doolittle at gmail.com>; 'John Ralls' <jralls at ceridwen.us>
> *Cc: *'GNU Cash User' <gnucash-user at gnucash.org>
> *Subject: *RE: Cash Back Rewards
>
>
>
> This from a novice:  Could one handle a CC rebate by crediting the interest
>
> charge account associated with that particular card?  With rebates
>
> offsetting credit card charges, one could easily track the 'profitability
>
> vs. expense' of holding that individual card?  If this makes sense, how
>
> would one handle the debit side of the transaction?
>
>
>
> -----Original Message-----
>
> From: gnucash-user
>
> [mailto:gnucash-user-bounces+lbolta=rogers.com at gnucash.org] On Behalf Of
> Les
>
> Sent: March-16-17 2:03 PM
>
> To: Edward Doolittle; John Ralls
>
> Cc: GNU Cash User
>
> Subject: Re: Cash Back Rewards
>
>
>
> Thanks for the feedback.  The debit to the liability was straightforward,
> it
>
> was the credit that stumped me.  I never thought of adding the expense such
>
> as rebates.
>
>
>
> Les
>
>
>
>
>
> On 03/16/2017 12:41 PM, Edward Doolittle wrote:
>
> > Uh, a rebate is a debit to liability and a credit to expense, no?
>
> >
>
> > Whether associated values are positive or negative depends on the
>
> > "Reversed Balanced accounts" setting. When set to "Credit accounts"
>
> > (the usual choice), a rebate will decrease liability balance and
>
> > decrease expenses.
>
> >
>
> > Edward
>
> >
>
> > _____________________________
>
> > From: John Ralls <jralls at ceridwen.us <mailto:jralls at ceridwen.us>>
>
> > Sent: Thursday, March 16, 2017 10:52 AM
>
> > Subject: Re: Cash Back Rewards
>
> > To: Les <lelliott5 at gmail.com <mailto:lelliott5 at gmail.com>>
>
> > Cc: GNU Cash User <gnucash-user at gnucash.org
>
> > <mailto:gnucash-user at gnucash.org>>
>
> >
>
> >
>
> >
>
> > > On Mar 16, 2017, at 9:22 AM, Les <lelliott5 at gmailcom
>
> > <mailto:lelliott5 at gmail.com>> wrote:
>
> > >
>
> > > I have a credit card that pays a cash back after accumulating at
>
> > > least $50 @ 3% for each purchase. How do I handle this credit
>
> > > against a current balance?
>
> >
>
> > I have a similar "rewards" card. I book the rebates as a credit (i.e
>
> > a negative value) to the CC liability account and a debit to an
>
> > "Expenses::CC Rebates" account because I'm too lazy to figure out how
>
> > much of the rebate to allocate to each of the "real" expense accounts
>
> > that it should apply to.
>
> >
>
> > Regards,
>
> > John Ralls
>
> >
>
> > _______________________________________________
>
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>
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-- 
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2

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