Avalanche vs snowball: which debt payoff order actually saves you more?
If you're carrying more than one debt — say a home loan, a credit card balance, and a car loan — the order you attack them in changes how much interest you pay and how fast you become debt-free. There are two well-known approaches, and they optimize for different things.
The avalanche method
Pay minimums on everything, then throw every extra rupee at whichever debt has the highest interest rate — usually your credit card, since those routinely run 30–42% APR in India. Once that's cleared, roll the freed-up payment into the next-highest-rate debt, and so on.
This is mathematically the cheapest path: it minimizes total interest paid, full stop. Any other order costs you strictly more in interest, dollar for dollar, given the same total extra payment.
The snowball method
Pay minimums on everything, then throw every extra rupee at whichever debt has the smallest balance, regardless of its interest rate. Once cleared, roll that payment into the next-smallest balance.
This is mathematically more expensive on average — you're often paying down a low-rate loan before a high-rate one. What it buys you is a quick win: your first debt disappears fast, which for a lot of people is the difference between sticking to a payoff plan and giving up on it.
So which one should you actually use?
If you're confident you'll stay disciplined regardless of how long it takes to see a debt fully close out, avalanche saves you real money — often tens of thousands of rupees in interest on a typical multi-debt Indian household (home loan + credit card + one more). If you've tried and abandoned a payoff plan before because progress felt invisible, snowball's early win can be worth the extra interest cost, because a plan you actually finish beats a cheaper plan you abandon in month four.
The honest answer is: run both on your actual debts and see the real rupee gap. For some debt mixes it's tens of thousands; for others it's a rounding error and the psychological win of snowball is basically free. That's exactly what our Get Rid of My Loan report computes for you — both strategies, on your real balances and rates, so you're picking with the actual numbers in front of you instead of a rule of thumb.