[GNC] 2 Questions About Debit Cards

[Adrien Monteleone]

Haim,

If the money is transferred in advance to the card, then the card is an asset and is a ‘pre-paid’ card similar to gift cards. (the fact that a credit card network like VISA might process the transaction isn’t relevant to this question)

If the money is drawn from checking to ‘pay’ for what you ’spent/charged’ on the card, then the card is a liability. Should something happen where that auto-payment doesn’t occur, you still owe the funds.

Be careful though, if the card was initially pre-funded and then subsequently topped off in the same amount of a purchase, that isn’t a liability payment. It is just fully funding the card back to the earlier level for ‘future’ use —thus, still a pre-paid card.

If the card is simply a way to draw funds out of checking without writing a paper check (like in the US and maybe some other locations), then there is no need for a separate account. (or separate transaction entries)

If the card truly is accounted for separately, and not just another means of access to the same account, (or maybe a segregation of funds in the same account) then you might want to create a separate asset account in GnuCash for tracking its balance and transfers/top-offs to it. (make it a sub-account of checking if it is a segregation of funds) Those transfers don’t need to happen each transaction. I would model the ‘real world’ transactions as they occur. That is, if you use the card 5 times in one day, but only one transfer happens for the sum of all of them, then just record that one actual transfer between checking and card. Don’t do it separately for each transaction. That way, if you have to research your GnuCash transaction history comparing to statements or online history, you’ll be matching up the same actual transactions rather than multiple ‘virtual’ ones. That process will go much smoother and faster. (and likely make it easier to spot a mistake)

However, by all means, speak to a local CPA (and your bank) for official advice. They’ll be more familiar with how the card functions, as well as your local laws, and can better advise you how to set up your books.

Regards,
Adrien

> On Aug 28, 2019 w35d240, at 4:52 AM, Haim Roman <haim.roman at gmail.com> wrote:
> 
> I get separate statements for the checking account & debit card.
> On the checking account, it just notes that money was transferred to the
> debit card.
> It's the debit card statement that says to whom I paid.
> 
> In addition, sometimes the checking statment notes a *single *transfer to
> the debit card that actually corresponds to *multiple *transactions on the
> debit card statement.
> 
> I live in Israel.  Maybe debit cards work a bit differently in other
> countries.