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Expensing Credit Card Payments Monthly instead of at purchase?

I opened a zero percent interest credit card at a retailer to make a large purchase. I still want to have the debt listed so I set up the account. However, instead of recognizing the original purchase as an expense, I would like to categorize the monthly payments as an expense but still lower the balace. Any ideas? Or just keep them completely separate?

Answers

  • Rich_MRich_M SuperUser ✭✭✭✭✭
    edited September 2020
    That is completely incorrect ... your expense incurred the day you made the purchase. 

    You now have a liability to pay off this debt with no interest, you no longer have an expense, you just have debt.

    Your monthly payments reduce your liability. 

    You may want to read this newsletter regarding the proper way to handle credit card accounts. 

    https://community.quicken.com/discussion/7880264/quicken-q-zette-september-20-edition#latest

    Quicken 2017 Premier - Windows 10 Pro
  • FrankxFrankx SuperUser ✭✭✭✭✭
    Hi @jonesmi69,

    It sounds like you want to expense the "large purchase" over time, but also want to track the debt outstanding in the credit card account.  You can do that by setting up an "asset" account for the "large purchase" using the amount of the original purchase price,  Then, on a monthly basis - as you pay down the credit card debt, you can expense the large purchase.  It will require you to make an additional monthly entry in Quicken but it will accomplish what you want to do.

    Let me know if you have any followups.

    Frankx


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  • FrankxFrankx SuperUser ✭✭✭✭✭
    @Rich_M,

    If you purchased a home using a credit card - have you "incurred" an expense "the day you made the purchase"? 

    No, you have paid for an "asset" using debt.  It doesn't matter whether the debt is a mortgage or a credit card - what matters is whether the "character" of the item purchased is an asset (something with a life of a year or more), or an expense (an expenditure that is used up in the current year).  BTW I am using ordinary every day language here for the sake of clarity.

    I suspect that a "large purchase" (to use the OP's terminology) will have a useful life of a year or more, therefore his question/concern is clearly not "completely incorrect."  And your reference to that excellent article by Quicken Natalie is not relevant, because it only discusses handling of credit card debt, not the assets or expenses that were the origination of said debt.

    Frankx


    Quicken H&B-Subscription - Ver. R29.20 - Build 27.1.29.20  - Windows 10 Home - Ver. 2004
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  • Rich_MRich_M SuperUser ✭✭✭✭✭
    @Frankx The post says he made a large purchase at a retailer ... I don't know anyone who has purchased a home at Target ... I would not classify any retail purchase as an asset. 

    I would wait until the poster clarifies what his large purchase was. 
    Quicken 2017 Premier - Windows 10 Pro
  • FrankxFrankx SuperUser ✭✭✭✭✭
    @Rich_M

    What's the "life" of a $2,000 large screen TV?  Is it less than 1 year - no.  Any asset that us not "used up" in a year can be (and should be under GAAP) capitalized.

    Frankx


    Quicken H&B-Subscription - Ver. R29.20 - Build 27.1.29.20  - Windows 10 Home - Ver. 2004
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