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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 another way. To the institution, your balance isn’t something it owns — it’s money it owes you. Whether a debit or credit grows or shrinks a balance depends on that balance’s persisted direction, not account type alone. 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 that balance’s persisted direction.

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Assets and liabilities: the two sides of the ledger

Each balance in a Ledger has a direction, and that direction — not an account category alone — decides whether a debit or credit changes its available amount. In Midaz, a balance direction is debit or credit:
  • A balance with direction debit increases its available amount on a debit and decreases it on a credit.
  • A balance with direction credit increases its available amount on a credit and decreases it on a debit.
An account type can supply a default direction, but Midaz applies the direction persisted on the balance. For every asset you define — BRL, USD, a loyalty point — the Ledger automatically keeps an external account named after it (@external/BRL, @external/USD), and you can define your own named external accounts too.
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.
An operation is the smallest Midaz record of a balance effect. A non-pending transfer can produce a source debit and destination credit; pending or canceled flows can also include ON_HOLD or RELEASE operations.
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 balance’s persisted direction: debit increases on a debit; credit increases on a credit.
  • 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.