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Chapter 8

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Credit card payments

Payments by credit card can usually be entered as deposits into the bank account, if this represents the actual transaction.  XE "Credit card payments"  XE "payments:credit card"  These accounts generally deduct a service charge each month, based on the volume of business.  The service charge is best handled as an ATM purchase, that is, as a check with no check number (and not to be printed.)

If the credit card company requires direct transmittal of credit purchase documents, a separate bank account is needed.  (It may not seem like a bank account, but other account types lead to complications.)  These cards usually require a deposit recorded as net of the service charge.  The service charge would be shown as a negative amount on the deposit record, going to an expense account. 

Each month, the credit card company returns a check, which will be deposited in your bank account.  Within QuickBooks, a deposit is not the optimum record.  The money is already recorded as in your possession. The effective way to handle the transaction is by writing a check in the credit card account.  The opposing account is your real bank account, which will receive the money as a transfer.  Because of reasons internal to QuickBooks, the credit card account should be reconciled.

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Last modified: May 21, 2004