Whats' the difference between reconciled and cleared?

Question

As stated, Whats' the difference between reconciled and cleared transactions?

brichter · Answer

> @Chris_QPW said:
 > Cleared means that it has cleared the bank.  The very fact that a transaction downloaded from the financial institution, should mean that it was cleared.
 > 
 > Reconciling is the process of making sure your records in Quicken match what the financial institution says.  Note that is only up to the point of what the financial institution has.  For instance, you write a check and enter it into Quicken.  At this point the financial institution knows nothing about that check, so it isn't "cleared" and as such is left out of any reconcile you will do until it posts with the financial institution.

Thanks.

jacobs · Answer

It may be clearer to think about this traditionally. Any transaction which shows up on your bank's website as a posted transaction has "cleared" the bank. If you download your transactions into Quicken, they come in marked as "cleared" (bleu checkmark) since your bank is reporting the transaction; if you enter your transactions manually, you could (but don't need to) click on transactions you see on the bank's website to mark them cleared. Then you would get a statement from your bank at the end of the month, and you would reconcile Quicken to your bank statement: in Quicken, you'd click reconcile, enter the bank statement ending balance, check off all the transactions which appear on the bank statement, and ideally should end up with zero difference. Quicken would then mark all those transactions as reconciled, turn all the checkmarks green, and save a record of all the transactions included in that reconciliation.

Quicken now gives users the option to "auto-reconcile" downloaded transactions, which means it will mark all transactions downloaded as not just cleared but reconciled. In this case, it downloads the balance the bank is reporting, downloads transactions into Quicken, and if they're in balance, all is good; if not, the user gets notified there's a discrepancy.

I'm old school, and I prefer to do a once a month reconciliation of my Quicken entries and my bank statement; same for credit card accounts.

Chris_QPW · Answer

P.S. Part of the reconcile process is to fix any differences between Quicken and the financial institution if such a condition comes up.