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Debt-to-Income Ratio (DTI)
A measure of how much of an individual's monthly income is consumed by debt payments.
More Details
A debt-to-income (DTI) ratio is a financial metric used to assess the financial health of an individual or household. It is calculated by dividing the total amount of debt that an individual has by their gross income (total income before taxes and other deductions).
Example
If you have a gross income of $50,000 per year and total debts of $10,000 per year, your DTI ratio would be 20%. This means that 20% of your gross income is being used to pay off debts.
Related Terms
Authorization
The process of verifying that a person has the right to use a particular credit or debit card for a transaction to protect against fraud.
Debt-to-Income Ratio (DTI)
A measure of how much of an individual's monthly income is consumed by debt payments.
Pension
A regular payment made from one's employer after retirement, based on factors such as length of employment and earnings.