Q: I have a checking account with a Line of Credit tied to it. I sometimes borrow from a specific line and that money is deposited into my checking. Then when I’m ready to pay it back, the money is returned to the line with the applicable fees. Ex: 500.00 borrowed, when paid 550.00 returned. How do I account for this?
Here’s how to do this.
- Set up the Line of Credit as a “Credit Card” account. Credit Card accounts in EEBA are actually good for any type of liability (loan) account.
- When you borrow from the line, do an Account Transfer (either on your phone under the Accounts tab or on the web under Accounts…Transfer Between Accounts). Transfer *from* your Line of Credit *to* your checking account. This will *add* to the balance of the Line of Credit and to the amount available in your Checking Account. So the Line of Credit’s balance will reflect what you *owe* on that line. [Unfortunately, right now there isn’t a way in EEBA to track the “limit” on the line of credit. I might recommend just putting it in the Name, i.e., “Wells Fargo LOC ($10K)” to remind yourself.]
- When you pay back the line of credit, you’ll want to create two transactions. First create a regular expense transaction accounting for the fee, which will be recorded to your Checking account and to an appropriate envelope, e.g., “LOC Fees”. In your example, this would be for $50.
- Then do an Account Transfer to transfer *from* your Checking back *to* your line of credit. In your example, this Account Transfer would be for $500. This will reduce the amount in your Checking account, and it will also reduce the amount you owe on the Line of Credit.