How Hedgi Categorizes Transactions (and Why It’s Better Than Your Bank)
If you’ve ever looked at your bank’s automatic transaction labels and felt confused (or misled), you’re not alone. Most banks use very basic rule-based systems that often misclassify your spending. That’s a big deal when you’re trying to stay tax-ready or run a business.
🔍 What Banks Typically Do
Most banks and credit cards assign categories based on vendor names or merchant codes (called MCCs). For example:
Chevron? Must be “Gas.”
Starbucks? Probably “Dining.”
Home Depot? “Home Improvement” — even if it was supplies for your landscaping business.
But real life isn’t that simple — and if you’re running a small business, those assumptions can cost you deductions.
💡 How Hedgi Does It Differently
Hedgi goes beyond merchant codes. We use a hybrid approach that includes:
Bank Rules + Smart Vendor Matching
We map known vendors to your business category using a curated internal database (like tagging “Zoom” as “Communications”).AI Categorization (Pro Tier)
We’ve trained an AI model on real-world small business data to understand context — not just names. It knows the difference between:Chevron for gas (deductible) vs. Chevron snacks (not)
Apple purchases for business equipment vs. subscriptions
Agentic Review (Agentic Tier)
If our AI isn’t confident, we escalate to a GPT-powered agent that uses context, past behavior, and category logic to get it right. It even explains why it chose a category — something your bank will never do.
✅ Why It Matters
More Accurate Books = Fewer audit risks
Better Deduction Discovery = Lower taxes
Less Manual Cleanup = Saved time every month
🧾 Bonus: You’re Always in Control
Even though Hedgi automates everything, you can still review, reclassify, and override any transaction with a single tap.