Bank Debits & Credits Definition

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Bank credits are when an individual or company makes a deposit to a bank account, while a bank debit is when money is withdrawn from an account. Avoid overdrawing on a bank account with advice from a registered financial consultant in this free video on bank accounts.

Part of the Video Series: Investing & Money Management
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Video Transcript

This is financial adviser Patrick Munro talking about the world of bank deposits and credits. A lot of folks when they open up a account with a bank, the language that the bank uses is somewhat confusing to them. I'd like to clear up a couple of things. If you know these following two terms, you know most of what you need when working with a bank. When you get a paycheck or you bring in some dollars to your account and deposit them with the bank, that's called a credit. And basically you're crediting your account with some new money and it's great and I hope you do that a lot because then you're adding to your wealth. However when you write a check, if you have a checking account for your car payment, your medical insurance, basically your food, your rent, anything of that nature, well that's a debit and it goes against the amount of money that you do have in your account. Well the difference between the debits and credits is your net balance of your account. You'll always want to make sure that you do not overdraw the account. Make sure you have a good, solid, tight budget so that your debits are well in mind and do not overextend because the charges at a bank are very expensive for that. This is financial adviser Patrick Munro talking about bank debits and credits.

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