How I Reconcile My Credit Card Activity Monthly.

Reconciling your credit card balance at the beginning of each month for the prior month’s activity is going to be the most difficult part of your monthly close process. Here is how I reconcile my credit card activity each month. By following my tips and tricks, it should a manageable process for you each month.

Failing to Reconcile Credit Card Usage Can Increase Financial Risk

Credit card debt is probably the greatest reason individuals and families get into financial trouble. With all the convenient ways to pay by credit card and all the confusion around statement dates and payment dates, it is easy to see why this happens.

Try To Use Just One Card For Everything

My wife and I share one credit card for 99% of our credit card activity. Because we are financially disciplined, we use it to pay for our recurring items, one-time big ticket items, groceries, dining out, gasoline, and so on. The other 1% of credit card activity comes from department store credit cards to take advantage of promotions available only if the store card is used.

Change Your Statement Date To the 1st Day of the Month.

The statement closing date for all our credit cards is the 1st of each month. Therefore, on the 2nd day of the month, I can log onto the card processor’s website and see the balance due for my activity for the previous month. This is a quick way of determining how much money I will need to get together by the 26th of the month when the full balance is due.

The above shows my activity goes from 3/2 to 4/1 and I have until 4/26 to pay the balance of $9,236.90.

Download Your Credit Card Activity in Financial Software

For many years, I have been using Quicken to track my personal finances. Quicken gives me the ability to download and categorize my credit card activity. Additionally, Quicken has the “Tag” field which I use to assign the bank \account that will cover the activity.

**I assign a category and tag to every transaction I download into the Quicken credit card register** .

Reconcile Your Credit Card Activity The At Beginning Of Each Month

Around the 3rd or 4th day of each month, I double check to make sure I have downloaded all of my credit card activity into Quicken and assigned a category and tag to each line item. Next, I run a Quicken report for my credit card activity from the opening date of the 2nd day of the previous month to the 1st day of the current month. Then, I verify that the report total ties out the amount on my credit card statement. I also summarize the report by “tag,” which shows me how much I need to transfer from each account to pay the balance in full.

The above Quicken report shows how much I need by account to pay the balance of $9,236.90 by 4/26/18.

Make Sure You Can Pay For Discretionary Items You Charged

Per Step 5 of my budgeting system, I also need to make sure that at March 31st, I still have at least $3,707.00 remaining in my primary checking account to cover the remaining balance due on April 26th. If not, I will need to cut into my personal savings account to transfer money into this account to cover the shortfall.

Arrange Auto Pay For Credit Card Payments

I have set up auto payment for my credit card balance to be deducted from my personal checking account on the 26th of each month. Based on the report above, I need to transfer by April 26th, into my personal checking account, the following amounts: $2,969.82 from my expense account, $2,124.08 from my recurring expenses account, and $436.00 from the account that I set up to run my vacation home.

Remember To Reconcile Your Credit Cards Every Month

While this process requires a little effort, I believe that if you want to become financially disciplined and have full control over your credit card activity, it is one you must follow each and every month.