I am having trouble entering some transactions

Eugenia Taylor

I am updating some credit card transactions. I manually split transactions when I pay by bill each month. I have a number of rather large refunds/credits and am not sure I am entering them correctly. What is the recommended way to do that? For instance, a down payment I made for a trip some months ago had to be refunded due to cancellation. So the initial transaction was in, say, January; the credit is in August.

RickO

The refund you received is an actual separate transaction on your credit card. Therefore, it should be recorded as a new, separate transaction in your credit card account in Quicken.

BUT WAIT, I just realized what you said... you do not have a separate account for your credit card in Quicken, but instead you make a big split transaction showing each individual charge when you pay the bill. Have I got that right?

If so, this is just one example of the MANY reasons why doing it the way you are is a really bad idea. Another reason is that you can't search by Payee for any given credit card transaction. Another bonus: you can balance the credit card account like any other account.

So what should you be doing? You should have a separate account in Quicken of type Credit Card. In this account, you enter (or download) each transaction on your card. If you purchased multiple items in one transaction that belong in separate categories, only then do you split the transaction (in the credit card account). 

As you enter transactions in the card account, it builds up a negative balance. When it comes time to pay the bill, you enter that payment in your checking account as a Transfer transaction to the credit card account. This is then reflected as a debit in the checking account and a credit in the card account, reducing or zeroing out the negative balance.

Once you have things set up this way, you would enter any refund as a single credit transaction in the card account on the date it was received using the original category that the charges was against (eg. Vacations). This will have the effect of offsetting the spending in any reports you do later on the category Vacations.

The benefits of handling a credit card account (and the disadvantages of doing what you have been doing) are too numerous to list. But you really should change over to this method.

But what do you do for now? Well, it depends how far back you want to go in moving your splits over to a separate credit card account. A lot of people would want to start fresh at the beginning of the year, but a lot of the year is already gone by. If you want to wait until January, you could enter your refund as one of the split lines in your checking account transaction but as a positive number. The problem will be if that makes the entire total of the split positive (your credit card owes you money). Obviously, they don't actually send you the money. They just hold it as a credit balance. So you would need to put in another split line that zeroes out the checking account transaction total, giving it some category like "credit card running credit". It's strange, but it's really the only way (that I can think of) to handle this odd situation when doing your credit card the way you have been.

BTW, when you transition over to the credit card as an account method, you will undoubtably need a balance adjustment transaction at the beginning to make things come out right since you didn't start this from day one with that card. That would be to be expected.

RickO

The refund you received is an actual separate transaction on your credit card. Therefore, it should be recorded as a new, separate transaction in your credit card account in Quicken.

BUT WAIT, I just realized what you said... you do not have a separate account for your credit card in Quicken, but instead you make a big split transaction showing each individual charge when you pay the bill. Have I got that right?

If so, this is just one example of the MANY reasons why doing it the way you are is a really bad idea. Another reason is that you can't search by Payee for any given credit card transaction. Another bonus: you can balance the credit card account like any other account.

So what should you be doing? You should have a separate account in Quicken of type Credit Card. In this account, you enter (or download) each transaction on your card. If you purchased multiple items in one transaction that belong in separate categories, only then do you split the transaction (in the credit card account). 

As you enter transactions in the card account, it builds up a negative balance. When it comes time to pay the bill, you enter that payment in your checking account as a Transfer transaction to the credit card account. This is then reflected as a debit in the checking account and a credit in the card account, reducing or zeroing out the negative balance.

Once you have things set up this way, you would enter any refund as a single credit transaction in the card account on the date it was received using the original category that the charges was against (eg. Vacations). This will have the effect of offsetting the spending in any reports you do later on the category Vacations.

The benefits of handling a credit card account (and the disadvantages of doing what you have been doing) are too numerous to list. But you really should change over to this method.

But what do you do for now? Well, it depends how far back you want to go in moving your splits over to a separate credit card account. A lot of people would want to start fresh at the beginning of the year, but a lot of the year is already gone by. If you want to wait until January, you could enter your refund as one of the split lines in your checking account transaction but as a positive number. The problem will be if that makes the entire total of the split positive (your credit card owes you money). Obviously, they don't actually send you the money. They just hold it as a credit balance. So you would need to put in another split line that zeroes out the checking account transaction total, giving it some category like "credit card running credit". It's strange, but it's really the only way (that I can think of) to handle this odd situation when doing your credit card the way you have been.

BTW, when you transition over to the credit card as an account method, you will undoubtably need a balance adjustment transaction at the beginning to make things come out right since you didn't start this from day one with that card. That would be to be expected.