Debit and credit transactions

Debits and credits are different types of transactions and are treated differently in the financial tools. It is important to understand these differences. Misunderstanding these differences can make it feel like you are experiencing duplicate transactions, bugs or other issues.

 

What do I need to know about debits & credits?
Debits: Amounts in black, represent a decrease to an asset account (e.g. money spent from checking) or an increase to a liability account (e.g. money spent on a credit card). Debits represent a loss in your net worth.

Credits: Amounts in green, represent an increase to an asset account (e.g. Paycheck) or a decrease to a liability account (e.g. the payment you make on your mortgage). Credits represent a gain in your net worth.
How are debit and credit transactions categorized in the financial tools?
Debits: Debit transactions are usually expenses, and should be assigned a spending category, such as Auto & Transportation: Gas or Home: Mortgage & Rent. These expenses, categorized appropriately, will be calculated in your Spending, Budgets and Trends reports.

Credits: Credit transactions are usually represented as income or a payment against a liability. Income should be categorized as Income. Payments, however, are slightly trickier. The credit portion of loan payments should be categorized as Transfer. This will prevent the credit from cancelling out the debit portion of the payment in your expense reports.

See the mortgage example below.
Credit card payments are automatically categorized as Transfer: Credit Card Payment to avoid duplicating spending in your budget and spending reports. Re-categorize the debit portion of a credit card payment as an expense (e.g. “Bills & Utilities” or “Financial”) to include it in your spending reports.
Why is a Credit categorized as a Transfer?
All debt payments have two transactions: the negative transaction of money leaving your bank account is a debit, and the positive transaction of money paid towards the debt is a credit.

The negative transaction (debit) should be categorized as the expense so your budget will reflect your spending in that category.

The positive transaction (credit) should be categorized as a transfer, so it does not void the expense portion of the payment.

Credit cards are treated differently, because a credit card payment is repayment for money borrowed, on transactions already accounted for in your budget.

By default, credit card payments will be categorized as Transfer: Credit Card Payment and will not appear in spending reports. 

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