What is the Difference Between Debit and Credit?

If you’re new to the world of finance, you may be wondering what the difference is between debit and credit . Here’s a quick rundown of the two terms and how they can affect your finances.

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Debit and credit are two of the most important concepts in finance. They are also two of the most often confused. So what is the difference between debit and credit?

Debit is an accounting term that refers to an entry on the left side of a ledger. Credit is an accounting term that refers to an entry on the right side of a ledger. Both debit and credit entries represent a financial transaction. The difference between debit and credit is that debit entries represent a decrease in assets or an increase in liabilities, while credit entries represent an increase in assets or a decrease in liabilities.

What is a Debit?

A debit is a financial transaction in which a customer reduces the balance of his or her checking account by the amount of the transaction. In a debit transaction, the customer’s bank account is debited for the amount of the purchase, and the merchant’s bank account is credited for that same amount.

Debits are typically processed faster than checks, and they have the added benefit of allowing customers to track their spending more easily. Most debit cards can be used anywhere credit cards are accepted, and they can also be used to withdraw cash from ATMs.

What is a Credit?

A credit is an accounting entry that increases a liability or equity account, or decreases an asset or expense account. Credits are typically denoted with theuse of the minus sign (-). In double-entry bookkeeping, a credit is always paired with a debit.

The Difference Between Debit and Credit

Credit and debit cards offer consumers a convenient way to pay for goods and services. But what exactly is the difference between the two types of cards?

Debit cards are linked directly to your checking account. This means that once you have been approved for the card, you can immediately start using it to make purchases or withdraw cash from an ATM. When you use your debit card, the funds are transferred immediately from your checking account to the merchant.

Credit cards, on the other hand, are not directly linked to a checking account. Instead, they are issued by a financial institution, such as a bank or credit union. When you use your credit card to make a purchase, you are borrowing money from the financial institution that issued the card. You will then need to repay that money, plus any interest and fees that may be charged, in full at the end of every billing cycle.


In conclusion, the main difference between debit and credit is that debit cards allow you to access funds that you already have in your account, while credit cards allow you to borrow money from a lender and then pay that money back over time. Both have their own pros and cons, so it’s important to choose the right one for your needs.

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