Record Credit Card Payment and Credit Card Rewards

rbtjd

Hi, how do I record credit card payment that came out of my bank account to payoff the balance?
Also, how should I record any credit card rewards?

Thanks

Mikeg

If the bank it came from is in Wave then, credit cash - debit the credit card liability. If it came from a personal bank account then, debit credit card liability and credit owners contribution. Rewards (credits on card) - The IRS treats these as a reduction of expense. You are only allowed to deduct an expense for what you actually paid for it. Since a "reward" paid for an expense it should reduce that expense.

rbtjd

@Mikeg said:
If the bank it came from is in Wave then, credit cash - debit the credit card liability. If it came from a personal bank account then, debit credit card liability and credit owners contribution. Rewards (credits on card) - The IRS treats these as a reduction of expense. You are only allowed to deduct an expense for what you actually paid for it. Since a "reward" paid for an expense it should reduce that expense.

Hi Thank you so much for your help.
Just one question, when it shows up on my transaction section. Under Category what should I put it as?
For Example

Payment to Chase Credit Card $100 (From my bank account)
Payment Received for Credit Card $100 (Paid to my Credit Card)

what should I categorize each one as?

Thank you!

Mikeg

Wave should recognize them as the same transaction when you do a transfer (from checking) to credit card. It should change the description for the one that is in green to transfer once you set the one from the checking account as a transfer. If not I always delete the payment received in the credit card that was imported. Hope that makes sense.

rbtjd

@Mikeg said:
Wave should recognize them as the same transaction when you do a transfer (from checking) to credit card. It should change the description for the one that is in green to transfer once you set the one from the checking account as a transfer. If not I always delete the payment received in the credit card that was imported. Hope that makes sense.

Hi Mike thank you for your help. Yes, it did change the description for both of the transactions. I am wondering how I should categorize them. I would not like to delete them if possible.

Thank you,

Mikeg

It categorizes them as transfers and they net to zero. No further action on your part with regards to the transfer between accounts. Hopefully, your accounts agree to the bank balances. You will need to classify the transactions that came through on the credit card on the Accounting/Transactions page to the appropriate expense.

rbtjd

@Mikeg said:
It categorizes them as transfers and they net to zero. No further action on your part with regards to the transfer between accounts. Hopefully, your accounts agree to the bank balances. You will need to classify the transactions that came through on the credit card on the Accounting/Transactions page to the appropriate expense.

Hi Mike,

it does not categorize them as transfers that why I am asking you how I should categorize them as. So should I make a new account named transfer? or do I need to something else?

ShaunSchan

If credit card rewards are considered a reduction in expense, should these be categorized in Wave as a "refund for expense"? My business credit cards give me rewards based on a percentage of total charges not rewards on specific expenses so I'm not sure how to classify these. Please advise.

Thanks in advance,
Shaun

Mikeg

@ShaunSchan,
I have clients that receive rewards in the same way. I usually categorize the reward as a refund of expense to the account in which the majority of charges relate. So for example, if the card mostly has technology subscription services, then the reward would reduce Technology Expense.

ShaunSchan

@Mikeg thanks a bunch for the prompt reply!