Bookkeeping Basics · Edmonton
Credit card reconciliation, without the headache.
Your business credit card is a liability, and it needs reconciling every month just like the bank. Here's how, with a full example and the mistakes that double-count expenses.
By the Plum team- Updated Oct 2026
- 8 min read
- A credit card is a liability: charges increase what you owe, payments reduce it.
- Reconcile it monthly to the statement's closing balance, exactly like a bank account.
- Record card payments as transfers from the bank, never as expenses.
- Add interest, annual fees and foreign transaction fees the statement shows.
- Hold on to the receipts: the statement alone won't support your GST credits.
Credit card reconciliation is the monthly check that the card balance in your books matches the balance on your card statement. It sounds like a repeat of the bank reconciliation, and the method is similar, but credit cards create their own special mistakes, and one of them quietly doubles your expenses.
This guide explains how a card works in double-entry terms, walks through a full worked example with numbers, shows the journal entries, and covers how to do it in QuickBooks Online. If you haven't read our step-by-step bank reconciliation guide, it's a good warm-up.
1Why a credit card works backwards
Your bank account is an asset. Your credit card is a liability: it's money you owe. In double-entry bookkeeping, liabilities increase with credits and decrease with debits. So:
| Event | Effect on card balance | Entry |
|---|---|---|
| You buy $200 of supplies on the card | Owing goes up $200 | Debit Supplies, credit Credit card |
| A supplier refunds $50 to the card | Owing goes down $50 | Debit Credit card, credit Supplies |
| The card charges $30 interest | Owing goes up $30 | Debit Interest expense, credit Credit card |
| You pay $1,000 from the bank | Owing goes down $1,000 | Debit Credit card, credit Bank |
That last line is the one people get wrong. The payment isn't a new cost. Each charge was already recorded as an expense when you made it. Paying the card just moves money from one account (the bank) to settle another (the card).
2A worked credit card reconciliation example
Say you're an incorporated consultant in Edmonton with a business Visa. Your October statement closes on October 31 with a balance owing of $3,412.60. Your books show the card owing $4,857.95 on the same date. That's $1,445.35 too high. Going line by line, you find three things:
- A $46.25 interest charge on the statement isn't in your books.
- A $8.40 foreign transaction fee on a US software subscription isn't in your books.
- Your $1,500.00 payment to the card on October 15 was recorded from the bank as "Office expenses" instead of as a payment to the card. The bank side is right, but the card never got credit for it.
| Reconciling the card | Amount owing |
|---|---|
| Balance in your books | $4,857.95 |
| Add: interest charge | + $46.25 |
| Add: foreign transaction fee | + $8.40 |
| Less: October 15 payment not applied to the card | − $1,500.00 |
| Adjusted book balance | $3,412.60 |
| Statement balance | $3,412.60 |
It matches. Notice the payment mistake didn't just throw off the card balance: it also overstated office expenses by $1,500, which would have overstated your deductions and understated your corporation's profit.
The journal entries
| Account | Debit | Credit |
|---|---|---|
| Interest expense | $46.25 | |
| Visa (credit card) | $46.25 | |
| Bank service charges | $8.40 | |
| Visa (credit card) | $8.40 | |
| Visa (credit card) | $1,500.00 | |
| Office expenses | $1,500.00 | |
| Totals | $1,554.65 | $1,554.65 |
The third entry reverses the wrong expense and applies the payment to the card. In QuickBooks you'd more likely open the original transaction and change its account from Office expenses to the Visa account, which has the same effect. Interest and card fees carry no GST, so there's no input tax credit on either.
3Credit card reconciliation in QuickBooks Online
In QuickBooks Online, your card should be set up as an account with the type Credit Card, not as a bank account or an expense. Then:
- Record charges from the bank feed or as expenses with the card as the payment account. Each one gets its proper expense category and GST code.
- Record payments as a transfer from the bank to the card, or with the Pay down credit card option under + New. When the payment shows up in both the bank feed and the card feed, match it to the same transfer in both places so it isn't entered twice.
- Reconcile from the gear icon, then Reconcile under Tools. Choose the card, enter the statement ending balance and ending date, then tick charges and payments that appear on the statement until the Difference is $0.00.
- Save the report. QuickBooks keeps a reconciliation report for each month. Store the statement PDF with it.
Several cards, or cards for staff
Give every card its own Credit Card account in QuickBooks, even if two cards share one credit limit. Statements are issued per card number, and reconciling each separately is what makes errors easy to spot. If a team member has a card, make it a rule that their receipts are uploaded the week they spend, not at month end, and that every charge has a short note: what it was and which client or job it was for.
When the receipt doesn't match the charge
Restaurants add tips after the receipt prints, US charges convert at the card's exchange rate, and hotels place holds that later drop off. Always record the amount that actually posted to the card, and attach the receipt anyway. For a restaurant bill, the posted total includes the tip; for a US charge, the posted Canadian amount is what you paid. Pending transactions don't belong in a reconciliation at all: only reconcile what has posted to the statement.
Why the statement date matters for GST
Your GST return covers the period the purchase happened in, not when you paid the card. A charge on March 29 that you pay in April is still a March purchase. Because the expense is recorded on the charge date, a reconciled card account means your input tax credits land in the right GST period automatically.
4Canadian rules that touch your card
- GST credits need receipts. Your statement shows the total paid, not the GST. Save each receipt or invoice. For larger purchases CRA also expects the supplier's GST number on it; check CRA's input tax credit documentation rules for the exact thresholds.
- Foreign charges. A US software charge appears in Canadian dollars on your statement. Record the Canadian amount the card actually charged. If a foreign supplier charged GST, keep that receipt and ask your accountant whether it can be claimed.
- Personal charges. If you're a sole proprietor, personal charges go to owner's drawings. In a corporation, they generally go to the shareholder loan account, and a balance you owe the company has repayment rules your accountant will want to watch.
- Meals and entertainment put on the card are generally only 50% deductible for income tax, so code them to their own account.
- Store everything for six years from the end of the tax year it relates to.
5Common credit card reconciliation mistakes
- Booking the payment as an expense. The big one, shown in the example above.
- Missing interest and annual fees. They only appear on the statement, so if you only use receipts, you'll never record them.
- Refunds recorded as income. A refund reverses the original expense; it isn't sales.
- Reconciling to the wrong date. Card statements often close mid-month, like the 22nd. Reconcile to the statement closing date, not the calendar month end.
- Using a card as a bank account in QuickBooks. Your balance sheet then shows debt as cash.
- One card for everything. Mixing personal and business spending is the main reason card reconciliations take hours instead of minutes.
Monthly card checklist
Card reconciliations are part of every month-end close, and they're often where we find the biggest cleanup opportunities when a new client joins. Plum reconciles business cards and bank accounts each month for owners across Edmonton, Sherwood Park and Leduc. If your card hasn't matched in a while, book a quick call and we'll take a look.
6Questions people ask
Is a credit card an asset or a liability?
A liability. The balance is money your business owes the card company, so charges increase it (credits) and payments reduce it (debits).
How do I record a credit card payment in my books?
As a transfer from your bank account to the credit card account: debit the credit card, credit the bank. Never record the payment as an expense, because the individual charges were already expensed.
Can I claim GST using my credit card statement?
Not on its own. To claim input tax credits you need the supplier's receipt or invoice showing the GST and, for larger purchases, their GST number. The statement only proves you paid.
What do I do with personal charges on a business card?
Record them against the owner. For a sole proprietor that's owner's drawings; for a corporation it's usually the shareholder loan account. They are not business expenses.
Is credit card interest tax deductible for a business?
Interest on a card used for business purchases is generally deductible as a business expense. Interest that relates to personal charges is not.
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Book a free 15-min callThis article is general information for Alberta businesses and isn't tax or legal advice. Rules and thresholds change, so confirm your situation with your accountant or CRA.