How To Record Credit Card Deposits In QuickBooks?

Last Updated on May 11, 2025 by Amrita Das

When managing your business finances, accurately recording credit card deposits can become a critical yet sometimes confusing task. Credit card payments often go through third-party processors, creating lump-sum deposits and accounting challenges due to processing fees. Properly recording these transactions ensures error-free financial records and streamlines reconciliation.

This guide simplifies the process and provides you with actionable steps to correctly record credit card deposits in QuickBooks. By the end, you’ll have a clear understanding of how to manage these transactions efficiently and accurately.

Table of Contents

What Is a Credit Card Payment?

In simple terms, a credit card payment refers to the transfer of funds to settle the outstanding balance on a credit card account. Whether made by individuals for personal purchases or by businesses for operational expenses, these payments help repay the amount owed, along with any applicable fees or interest.

Here’s what typically happens:

Usage: A credit card is used for purchases or cash advances, building a balance over a billing cycle.
Statement Issued: A statement summarizing all transactions, fees, and the total balance due is sent to the cardholder.
Payment Due: The cardholder submits payments to cover the balance (or a portion of it) by a specified due date. Methods include online transfers, checks, or in-person payments at a bank.

Failure to pay within the due period results in late fees, increased interest rates, or, in severe cases, a hit to credit scores.

Why Properly Recording Credit Card Deposits Matters?

Before jumping into the steps, it’s essential to understand why recording credit card deposits correctly is crucial:

Accurate Financial Records: Credit card payments usually involve fees and delays. Detailed records tie revenues properly to their associated payments and fees, providing a clearer financial picture.
Easier Reconciliation: Since credit card deposits are often grouped, properly recording them makes reconciling your QuickBooks records with your bank statement much easier.
Tax Compliance: Keeping accurate records ensures no discrepancies when reporting income, even with fees deducted by processors.

Step-by-Step Guide to Recording Credit Card Deposits

Step 1. Record Credit Card Payments from Customers

When a customer pays an invoice or immediately purchases a product/service via a credit card, you’ll need to record the payment. This can be done through the Receive Payment or Sales Receipt features in QuickBooks.

Option A. Using the Receive Payment Feature

Navigate to + New on the QuickBooks menu and select Receive Payment.
Choose the appropriate Customer from the drop-down menu.
Fill in the Payment Date and select “Credit Card” from the Payment Method field.
Select Undeposited Funds in the Deposit To field for now (we’ll handle the deposit later).
Check the specific invoice(s) this payment applies to and ensure the Amount field matches the customer’s payment.

Scenario:

If a customer paid $120 for an HVAC service, record it against their invoice with the same details.

Option B. Using the Sales Receipt Feature

If no invoice was issued, you can record the payment as a sales receipt:

Jump to + New, and after that, select Sales Receipt.
Choose the Customer and set the Date.
Fill in the details of the product or service sold and the payment amount.
Select “Credit Card” as the Payment Method.
Choose Undeposited Funds for Deposit To.

This step ensures customer payments are properly recorded in QuickBooks and temporarily stored in the “Undeposited Funds” account.

Step 2. Match Deposits in Undeposited Funds

Credit card processors typically batch multiple transactions together before depositing the funds into your bank account. These batches need to be matched in QuickBooks for accurate reconciliation.

To do this:

Navigate to + New and select Bank Deposit.
Choose your company’s Bank Account from the Account drop-down menu.
Set the Deposit Date to match the actual bank deposit date.
Under Select the payments included in this deposit, check all payments that the processor grouped together for the specific deposit.
Double-check that the Total matches the bank deposit amount.

Step 3. Account for Processing Fees

Credit card processors often deduct fees before transferring funds to your account. To account for this:

Scroll to the Add funds to this deposit section on the Bank Deposit page.
Enter the processor (e.g., PayPal, Stripe) in the Received from field.
Choose an Expense Account such as “Credit Card Processing Fees.”
Input the fee as a negative amount under Amount (e.g., -$5.50).
This ensures that the processor fees are properly recorded as expenses, leaving an accurate net deposit total.

Step 4. Reconcile Deposits with Bank Statements

Once deposits have been recorded in QuickBooks, the final step is reconciling your records with your bank statement:

Navigate to Accounting > Reconcile.
Choose the relevant bank account and the statement ending date.
Match deposits recorded in QuickBooks with the amounts on your statement.
This step ensures all transactions are correctly recorded and adjusted for discrepancies.

Tips for Streamlined Recording

Create a Credit Card Clearing Account

Use this as a temporary holding account for credit card payments before placing them into your main operating account. This minimizes clutter in your “Deposits” window while giving you better visibility into pending payments.

Batch Payments on a Schedule

If your processor deposits funds bi-weekly or weekly, record batches instead of individual payments to align with your specific deposit schedule.

Leverage QuickBooks Payment Integration

Consider using QuickBooks Payments for seamless processing. Integrated systems reduce manual work as payments are automatically matched to invoices.

Troubleshooting Common Challenges: How To Record Credit Card Deposits?

Problem 1: Payments Stuck in Undeposited Funds

Some users report payments sitting in “Undeposited Funds” without being properly categorized. If this happens, ensure you’ve completed Step 2 to assign payments from Undeposited Funds to your bank account.

Problem 2: Deposits Don’t Match Bank Statements

If there’s a mismatch, ensure all fees and timing differences are accounted for. Cross-check QuickBooks deposits against your processor’s statement and bank records.

Problem 3: Handling Weekend Payout Delays

For transactions that span different cutoff times (e.g., weekend deposits posted on Mondays), reconcile these deposits with an appropriate “cutoff adjustment” to match the processor’s schedule.

Step-by-Step Guide to Setting Up a Credit Card Account in QuickBooks

Follow these steps to create a credit card account in QuickBooks and start managing your transactions efficiently.

Log Into QuickBooks

Begin by logging into your QuickBooks Online account with your username and password. This ensures you’re on the platform and ready to begin.

Navigate to the Chart of Accounts

Once you’ve logged in:

Go to the “Company” menu.
Select the “Chart of Accounts” from the drop-down menu. This section lists all the accounts tied to your business, whether they’re for banking, income, expenses, or credit cards.

Add a New Credit Card Account

To create a new credit card account:

Click the “+” (Plus) button or the “New” option.
Choose “Credit Card” as the account type.

Fill in the Details

You’ll need to provide details about the credit card, including:

Account Name (e.g., “Vendor Credit Card” or “Employee Expenses”).
Card Number (for internal tracking purposes only; this won’t be visible to external parties).
The Account’s Starting Balance (this reflects the outstanding balance on the card up to the date you’re adding it).

Save the Account

After filling in all the details:

Click Save and Close to finalize the setup.
And that’s it! You now have a credit card account in QuickBooks

Conclusion: How To Record Credit Card Deposits In QuickBooks?

If you’re overwhelmed by manual work, expenses, and reconciliations, QuickBooks offers solutions to automate portions of this process. Integrated merchant services such as QuickBooks Payments can reduce these headaches by automatically reconciling credit card payments and fees.

Properly recording your credit card deposits ensures your financial records remain accurate and lets you focus on growing your business.