How does credit card reconciliation process work

Ensure accuracy, prevent fraud, and avoid billing errors with the help of credit card reconciliation.
How does credit card reconciliation process work
4 min read
26 July 2023

What does credit card reconciliation mean

Credit card reconciliation is an accounting process where financial transactions are verified as per the credit card statements. This process helps credit cardholders identify any errors or discrepancies in their credit card bills and helps to ensure that they are not overcharged, undercharged, or prone to fraudulent activities.

Why credit card reconciliation deserves attention

Credit card reconciliation is important because it helps credit card users

  • Maintain accurate records
  • Reduce potential billing errors
  • Avoid overspending
  • Track any fraudulent activities
  • Check for unauthorised transactions

Credit card reconciliation process

  1. Collecting relevant records: Collect all the necessary documents, including all receipts, invoices, statements, and other financial transaction records on a bi-monthly basis.
  2. Matching transactions: Compare the transactions recorded in these documents with those recorded in the credit card statements.
  3. Identifying discrepancies: If there are discrepancies, identify them and investigate immediately.
  4. Rectifying errors: If there are any billing discrepancies or errors, such as charges for unauthorised transactions, report them to the issuer.

Potential challenges that you may find during credit card reconciliation

In an ideal situation, general ledger accounts and credit card statements should match always match without an exception. But it isn’t the case always.

Unclear statement dates: As your credit card statements are not always sent to you at the end of the month, they can carry transactions from two different months, which can lead to lack of clarity.

It is crucial to carry out credit card reconciliation regularly to ensure that there are no errors in your credit card statements. Keeping your financial records organised can help make this process easier for you.

It is best to set aside time every month or quarterly, depending on the frequency of credit card use which will also help to ensure that card users avoid overspending, manage their finances effectively and maintain a good credit score.

You can manager your credit health like a pro using the Bajaj Finserv Credit Pass.

Frequently asked questions

What is an example of a credit card reconciliation?

An example of credit card reconciliation could be a situation in which a credit cardholder's financial transaction records show that they made a purchase for Rs. 5,000 at a specific merchant, but the amount recorded on the credit card statement is Rs. 6,000. By investigating the discrepancy, identifying the error, and liaising with the bank to rectify the mistake, the credit cardholder can ensure an accurate payment is made.

How can I improve my credit card reconciliation?

To improve credit card reconciliation, ensure that all financial transaction records are kept accurate and organised. Identify any discrepancies as soon as they are detected to detect any errors and prevent fraudulent activities. Regularly reviewing credit card statements advised.

What is the formula for credit card reconciliation?

There is no specific formula for credit card reconciliation. The process involves comparing the credit card statement to financial transaction records to identify any inconsistencies and rectifying the errors or discrepancies as necessary.

How do you reconcile a credit card account?

To reconcile a credit card account, collect all records of financial transactions, compare them to the credit card statement, and identify any discrepancies or errors. Then, notify the issuing bank and request that they correct any identified errors or mistakes.

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