A quick and friendly guide to help you understand what “credit” means when it comes to your bank account.
Understanding Credit in Everyday Banking
When you hear the word credit, you might think of loans or credit cards. But in basic banking, the term has a much simpler meaning.
In a deposit account — like your checking or savings account — a credit is an increase in your balance. Any time you add money to your account, the bank records it as a credit.
In other words, credit = money coming in.
Common Examples of a Credit
Here are a few everyday situations where your account receives a credit:
-
You deposit cash at the bank.
-
Your salary is sent directly to your account.
-
You transfer money from another account you own.
-
Someone sends you money using a banking app.
-
A refund is returned to your account after a purchase.
In all these cases, your account balance goes up, so the bank marks it as a credit.
Credit vs. Debit: What’s the Difference?
To really understand credit, it helps to know the opposite term: debit.
-
Credit = money added to your account
-
Debit = money taken out of your account
So if you swipe your debit card, the money leaves your account — that’s a debit. But if you receive your paycheck, that’s a credit.
Think of your account like a bucket:
-
Pouring water in = credit
-
Taking water out = debit
Simple as that.
Why Credits Matter
Understanding credits helps you:
-
Track where your money is coming from
-
Read your bank statements with confidence
-
Avoid confusion when reviewing your account activity
By recognizing what a credit is, you get a clearer picture of how your money moves — which is a great step toward better financial awareness.
