That unexpected negative balance usually happens when credit card payments from your checking account get tagged as regular expenses instead of transfers between your accounts. Let's take a look at why this happens and how you can easily fix it!
When you pay off your credit card using your checking account, QuickBooks Online looks for a Transfer so it can move money out of checking and lower your credit card balance. If the payment gets categorized as a "Credit card payment" expense instead, QuickBooks treats it like a brand-new expense rather than moving existing funds. This inflates your liabilities and leaves both account balances looking off.
The correct categorization going forward:
- Checking account side: Transfer (to the credit card account)
- Credit card account side: Credit card payment (reducing the balance owed)
To fix downloaded transactions (from bank feeds):
- Go to Transactions > Bank Transactions and open your checking account.
- Click the Categorized tab.
- Find the misclassified credit card payment and click Undo in the Action column.
- The transaction moves back to For Review.
- Expand it, select Record as transfer, and choose the credit card account as the destination.
- Click Add.
To fix manually entered transactions:
- Go to Accounting, then Chart of Accounts.
- Find your checking account, and select View Register.
- Open the transaction and change the category to Transfer, then select the credit card account.
- Save the change.
Quick way to tell which is which: If a transaction in the Categorized tab has an Undo button, it came through bank feeds. If it doesn't, it was manually entered and needs to be corrected in the register.
If you'd like a complete walkthrough on how to handle credit card payments moving forward, check out our guide on recording credit card payments in QuickBooks Online.
Once you've made those updates, running a quick reconciliation will help ensure everything matches up perfectly. If you run into any hiccups while reconciling, our article on fixing reconciliation issues in QuickBooks Online has you covered!
If you have a large batch of transactions to sort through, touching base with an accounting professional before finishing your reconciliation can save you a lot of time. Feel free to leave a reply below if you run into any unique situations or have extra questions. We're here to help!
