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Two words trip up almost everyone the first time they read a banking system: debit and credit. They sound like accounting jargon, but they name something simple — the two ends of a money movement. A debit is where money comes from; a credit is where it goes.

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Debit is out, credit is in

Every movement of money leaves one account and arrives in another. Those two ends have names:
  • A debit is the account money moves out of — the source.
  • A credit is the account money moves into — the destination.
When you send R$100 to a merchant, your account is debited (money out) and the merchant’s account is credited (money in). One movement, two sides. This is exactly how your bank statement already reads: money leaving your account shows as a debit, money arriving shows as a credit.

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Your wallet is not the whole story

Here’s where the everyday intuition and the accounting meaning part ways — and it’s the single most common source of confusion. In your wallet, the math is obvious: money in is good, money out is less. When your bank says it credited your account, your balance went up; a debit took money away. So it’s tempting to read credit = add, debit = subtract. But that’s your wallet’s point of view. The ledger that holds your money sees the same balance the other way around. To the institution, your balance isn’t something it owns — it’s money it owes you. The words don’t flip to torment you; they flip because a debit and a credit are the two sides of one movement, and whether a side grows or shrinks a balance depends on which kind of account it lands on. So keep the two ideas apart:
  • Wallet thinking asks: did my number go up or down?
  • Accounting thinking asks: which account did this movement leave (debit), and which did it arrive in (credit)?
The accounting meaning is the reliable one, and it never changes: a debit is the source, a credit is the destination. Whether that raises or lowers a given balance is a separate question — answered by the kind of account, which is the next idea.

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Assets and liabilities: the two sides of the ledger

Every account in a Ledger sits on one of two sides, and that side decides whether debits or credits make it grow.
  • Liabilities — what the Ledger owes. The everyday accounts inside your Ledger — customer wallets, merchant balances — are liabilities: value the institution holds on someone’s behalf and owes back to them. They grow with credits (money arriving) and shrink with debits. Your bank balance is exactly this: an asset in your wallet, a liability on the bank’s books.
  • Assets — what the Ledger holds against them. The matching asset lives at the boundary, in an external account. It grows with debits and mirrors the value that has crossed into the Ledger from the outside world.
In Midaz this pairing is built in. For every asset you define — BRL, USD, a loyalty point — the Ledger automatically keeps one external account per asset, named after it (@external/BRL, @external/USD), and you can define your own named external accounts too. When R$100 enters the Ledger, the external account is debited and a customer account is credited: the asset side and the liability side move together, by the same amount, at the same instant. Because an external account mirrors value seen from the outside in, it can show a negative balance — and that’s correct, not a bug. It’s simply the other half of the double-entry, recorded at the edge.
Same R$100, two truths: it’s an asset in your wallet and a liability on the institution’s Ledger. Both are right — they’re just the two sides of the same movement. The outside world follows the asset side across the boundary.

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The iron rule: debits always equal credits

Here is what makes the whole system trustworthy: total debits always equal total credits. Every movement is recorded on both sides at once — the same amount out of the source and into the destination — so the two sides match exactly. If they don’t, something is wrong, and the books say so. Take that R$100 payment. R$100 leaves your account as a debit and R$100 arrives in the merchant’s account as a credit. One event, two entries, totals equal: The money didn’t appear or vanish — it moved from one account to another, and the matching debit and credit prove it. This is the engine behind double-entry bookkeeping: every movement written down twice, once as it leaves and once as it arrives.
A single debit or a single credit — one side of one movement — is the smallest unit you can record. In Lerian, that unit is called an operation.
See also in Core BankingSee what debit and credit mean from the ledger’s side in How money is recorded.

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In short

  • A debit is the account money moves out of (the source); a credit is the account money moves into (the destination). That meaning never changes.
  • Your wallet and the ledger read the same balance differently: to you it’s your money; to the institution it’s a liability — money it owes you.
  • Which side a debit or a credit grows depends on the account: liabilities (accounts inside the Ledger) grow with credits; assets (external accounts, one per asset) grow with debits and can look negative.
  • Total debits always equal total credits, so money is never created or lost — it only moves.
Next upDebits and credits only make sense as a pair. See how they work together in Double-entry bookkeeping.