Why are transfers used?

msoultan

I'm guessing this is probably less of a Quicken question and more of an accounting question - I'm relatively new to both.

I have Quicken connected to my bank for my checking and savings account and I'm successfully able to download transactions.

I understand that I can change the category of a transaction to mark it as a transfer to another account, but I'm confused as to why I would do this. Is there any reason why I would ever transfer money from one account to another in Quicken, instead of doing it on my bank and then downloading the transactions?

I guess I'm just struggling to understand when you'd want to transfer money from one online account to another (if ever), or is it really for transferring funds from online to offline accounts (or offline to offline accounts)? It would be really helpful if someone could post some real-world scenarios where you'd transfer funds from one account to another (online or offline).

Thanks!

Mike

Bob_L

Well you could have accumulated too much in your checking account and you want to move some of it over to a savings account. Of course when you do that you will need to create the real world transfer at your bank or via its web site. The order doesn't matter. If you make the transfer at the bank you can either wait for it to be downloaded or you can go ahead and create a manual transfer transaction in Quicken which will then "match" the downloaded one when it comes down. The point is that quicken should mirror what goes on in the real world.

splasher

A transfer in Quicken is used to tie the two transactions together as a pair, such that, when one side is created, the mating transaction is created at the same time. Deleting one, deletes the other.

Now, there were some financial institutions (FI) that supported the Direct Connect download method which was a two-way communication, so that you could generate a transfer transaction in one account (lets say Savings) to another account (lets say Checking) and it would initiate an action at the FI to do the actual transfer of funds without having to use the FI's phone app or signing into its website to do the transfer.

It was also possible to cause a payment to be made via the FI's bilpay system if the FI supported it. My CU used to support transfers but not payments, so it was a matter of how much support the FI was willing to do.

Now, You can wait for the download to happen, you just want to make sure that you pair the two transactions as a transfer.

Keep in mind, a transfer is just changing which pocket the funds are in and not an expense or income item. Even a payment to a credit card company is a transfer, it is not an expense, the expense was when you made the purchase.

Examples: Making a credit card payment; moving funds from Savings to Checking; buying a CD which is in a separate Quicken account.