Debt Payoff Calculator
Plan your debt-free journey using the Avalanche or Snowball method
Add a Debt
Debt Name
Balance (₹)
₹
Annual Rate (%)
%
Min Payment (₹/mo)
₹
Extra Monthly Payment (₹)
₹
Payoff Strategy
Debt-Free In
—
Total interest: —
Total Amount to Pay—
Number of Debts—
Payoff Order
Avalanche vs Snowball — Which Should You Choose?
The Avalanche method pays the highest-interest debt first while making minimums on others. Mathematically optimal — saves the most money in interest over time. Best for people who are motivated by numbers and long-term savings.
The Snowball method pays the smallest balance first. Psychologically powerful — you eliminate debts faster, giving a sense of momentum. Research by behavioral economists shows people stick with this method longer. Best if you need motivation and quick wins.
lightbulb Example
Debts: Credit card ₹50K at 36% + Personal loan ₹2L at 14%. Min payments only.
1Avalanche: Pay CC first (36%) → saves most interest
2Snowball: Pay CC first anyway (smaller balance too!)
3Add ₹5,000 extra/month → debt-free ~18 months sooner
✓ Extra payment is more impactful than strategy choice
How to Use This Calculator
- 1Add each debt — enter name, current balance, annual interest rate, and minimum monthly payment.
- 2Enter any extra monthly amount you can put toward debt beyond the minimums.
- 3Choose Avalanche (max savings) or Snowball (max motivation) strategy.
- 4See your debt-free date and payoff order. When one debt is cleared, roll its payment to the next.
Key Terms
- Debt Avalanche
- Strategy that targets the highest-interest debt first. Minimizes total interest paid. May take longer to eliminate the first debt if it has a large balance — requires patience.
- Debt Snowball
- Strategy that targets the smallest balance first. Eliminates individual debts faster, providing psychological momentum. May pay slightly more interest than avalanche.
- Payment Rollover
- The key principle of both methods: when a debt is paid off, add its payment amount to the next target debt's payment. This accelerates payoff exponentially.
- Extra Payment
- Any amount above the sum of minimum payments. Even ₹1,000 extra per month can save years of debt and lakhs in interest — the most powerful lever available.
quizFrequently Asked Questions
Which debt payoff method saves more money — Avalanche or Snowball?
The Avalanche method always saves more money mathematically because it eliminates high-interest charges faster. The difference can be significant when rates vary widely — for example, clearing a 36% credit card before a 12% personal loan saves considerably more interest than vice versa. However, behavioral research shows that many people abandon Avalanche if the highest-interest debt also has the highest balance (the first payoff takes too long). In practice, the "best" method is whichever one you stick with. If motivation is a concern, start with Snowball to build momentum, then switch to Avalanche.
Should I invest or pay off debt first?
The math says: compare your debt interest rate to your expected investment return. If your credit card charges 36% APR, no investment reliably returns 36% — pay the card first. For a home loan at 8.5%, if you expect 12%+ from equity SIPs, investing may be more valuable. A practical framework: (1) Always pay minimums on all debts to avoid penalties. (2) Build a small emergency fund (₹50,000–1 lakh) before aggressively paying debt — otherwise you'll borrow again for any surprise expense. (3) Then attack high-interest debt (above 15%). (4) For lower-rate debt, balance between debt payoff and investing.
What is debt consolidation and does it help?
Debt consolidation combines multiple debts into a single loan at a lower interest rate. For example, taking a personal loan at 14% to pay off three credit cards at 36% reduces interest significantly. It simplifies payments (one EMI instead of many minimums) and reduces total interest. However, it only works if: (1) you qualify for a rate lower than your existing debts, (2) you don't accumulate new credit card debt after clearing the cards, and (3) the total repayment amount (principal + interest) is less than continuing on the existing debts. Use this calculator to compare scenarios.