November 20th, 2024

The holiday season is a time of joy but can also bring financial stress, especially if debt levels are high. Your debt-to-income ratio (DTI)—the percentage of your monthly income that goes toward debt payments—plays a big role in financial health. A high DTI can limit your ability to secure loans with favorable rates, but you can take steps to manage it effectively.

Why DTI Matters? Lenders look at your DTI to decide if you can handle additional debt. Ideally, less than 36% of your income should go toward debt payments. If your DTI is higher, you may face challenges like loan denials or higher interest rates.

Steps to Lower Your DTI

• Pay Down Debt: Focus on reducing high-interest balances or small debts.
• Create a Holiday Budget: Track spending and avoid overextending yourself. Redirect any savings toward debt payments.
• Increase Income: A seasonal side hustle or selling unused items can help lower your DTI faster.
• Monitor Your Progress: Easily monitor your credit & debt with Credit Savvy, built into our new digital banking platform, you can monitor your debt levels and credit health effortlessly. Credit Savvy helps you stay informed and on track, making it easier to manage debt and work toward financial goals.

Take charge of your finances this holiday season. Small changes now can lead to big rewards later. For more detailed advice and tools to lower your DTI, visit our education partner, GreenPath for their full article.