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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
eStatements
An electronic version of a bank or credit union statement, which is a summary of an individual's account activity and current balance.
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.
Insurance
An agreement in which an individual or entity pays a premium to an insurer in exchange for protection against potential losses or damages.