How to Categorize Credit Card Payments in QuickBooks

To categorize credit card payments in QuickBooks, record the payment from your bank to the credit card account, then categorize each expense to the right account, such as office supplies or utilities. This ensures your liability balances decrease correctly and your expenses are tracked in the right categories. Reconciling afterward confirms that your records match your statements, giving you accurate books every month.

Understand What Categorizing Credit Card Payments Means

Before you begin, it’s important to know what’s actually happening when you categorize. In QuickBooks:

• Expenses paid by credit card reduce your liability (the credit card balance) while recording the proper expense category (such as Supplies, Utilities, or Advertising).
• Credit card payments to the bank reduce your bank account and reduce the liability in your credit card account.

Think of it as telling QuickBooks where the money is going (the expense account) and where it’s coming from (the bank or credit card account).

Record the Credit Card Payment

In QuickBooks Online, you’ll need to create a transaction that reflects moving money from your bank account to the credit card company.

1. Log in to QuickBooks Online.
2. Go to the + New button on the left-hand menu.
3. Select Pay down credit card under the Vendors section.
4. Choose the credit card account you want to pay.
5. Select the bank account from which the payment is made.
6. Enter the payment amount, payment date, and any additional details such as the check or reference number.
7. Save and close.

This step ensures your bank account decreases and your credit card liability decreases by the same amount.

Categorize Expenses Paid by the Credit Card

Whenever you use your credit card for business purchases, you must categorize each transaction correctly.

1. Go to Banking/Transactions in the left-hand menu.
2. Select the Credit Card account.
3. Find the expense transaction in the feed.
4. Choose the proper category (such as Office Supplies, Meals, Fuel, or Professional Services).
5. If the purchase is billable to a customer, mark it as billable and assign it.
6. Save the categorization.

This process ensures that your expense reports accurately reflect where money is being spent.

Reconcile Credit Card Payments

After categorizing both the expense and the payment, you’ll want to reconcile to ensure accuracy.

1. Go to Settings (⚙️ icon) > Reconcile.
2. Select the Credit Card account.
3. Enter the statement ending balance and date from your credit card statement.
4. Check off the expenses and payments in QuickBooks that match your statement.
5. Confirm the difference is $0.00.

Reconciliation ensures your records match the credit card company’s records, helping you spot errors or missing entries.

Example of Categorization

Imagine you use your business credit card to pay a $200 office supplies purchase at Staples and later make a $500 payment to the credit card company from your bank account.

• Step 1: Categorize the Staples transaction as “Office Supplies Expense.”
• Step 2: Record the $500 payment from your checking account to the credit card account.‍
• Step 3: Reconcile to ensure both transactions appear correctly.

Bonus Tip: Automate with DepositFix + QuickBooks

If you’re accepting credit card payments from customers through online forms or your CRM, tools like DepositFix integrate seamlessly with QuickBooks. Payments are automatically applied, categorized, and synced, which reduces manual entry and prevents errors. You can even pass processing fees to customers if needed, ensuring full recovery of transaction costs.