Snowball vs Avalanche: which saves more?
For most salaried Indians with a mix of high-rate credit card debt and lower-rate EMI loans, the avalanche method saves more interest — often ₹50,000–₹2 lakh on a typical 3-loan portfolio. Snowball wins when your debts have similar rates and you need motivation to stay on track.
How to use this calculator
- 1Add your loans
Enter each debt — name, outstanding balance, annual interest rate, and monthly minimum payment. Add credit cards, personal loans, car loans, home loans, and informal debts.
- 2Enter your monthly budget
Fill in take-home pay, needs (excluding EMIs), and wants. The calculator shows your 50/30/20 split and debt-to-income ratio.
- 3Pick snowball or avalanche
Snowball clears the smallest balance first. Avalanche targets the highest rate first. Switch between them to see the interest difference.
- 4Add lump-sum payments
Got a bonus or tax refund? Schedule it as a prepayment and see exactly how many months earlier you'll be debt-free.
- 5Review the timeline
The payoff timeline shows the exact month each loan closes and how much interest you save.
What changes your debt-free date
Interest rate spread
The bigger the gap between your highest and lowest rate loans, the more avalanche saves over snowball. A 36% credit card next to a 9% car loan is a classic case for avalanche.
Extra monthly budget
Even ₹3,000–5,000 above your current EMIs can shave 12–24 months off your payoff. Freed EMIs from cleared loans compound this effect.
Lump-sum prepayments
A ₹1 lakh prepayment early on a high-rate loan saves far more than the same amount later. Early principal reduction cuts all future interest on the remaining balance.
Number of debts
More debts means more EMIs locked as minimums, leaving less surplus for the priority debt. Clearing small debts first frees up budget.
Frequently asked questions
What is the debt snowball method?
The debt snowball method means paying off your smallest loan balance first while making minimum payments on everything else. Once the smallest debt is cleared, you roll that freed-up EMI into the next smallest. The psychological wins keep you motivated — research shows snowball users are more likely to stay consistent.
What is the debt avalanche method?
The debt avalanche method targets the loan with the highest interest rate first, regardless of balance. You make minimum payments on all other debts and put every extra rupee toward the highest-rate loan. Mathematically, avalanche always saves you the most interest.
Which is better for Indians — snowball or avalanche?
If you have high-rate credit card debt (18–40%) alongside lower-rate loans (home loan at 8–9%), avalanche saves significantly more. If your rates are similar and you need motivation, snowball works better. Use Kedil's calculator to compare both with your actual loan data.
How much can I save by changing my debt repayment strategy?
A typical salaried Indian with 3–4 loans can save ₹20,000 to ₹2 lakh in interest by switching from minimum payments to snowball or avalanche — even with just ₹5,000 extra per month. The calculator shows you the exact number for your situation.
Should I prepay my loans with a bonus or keep investing?
If your loan interest rate is higher than your expected post-tax investment return, prepay the loan. Credit card debt at 36% or personal loans at 14–18% should almost always be prepaid before investing. For home loans at 8–9%, use Kedil's Prepay vs Invest calculator.
Does making lump-sum payments really help?
Yes, significantly. A single ₹50,000 lump-sum on a ₹5 lakh personal loan at 14% can shorten your payoff by 4–6 months and save ₹15,000–₹25,000 in interest. The impact is largest when applied early and to the highest-rate debt.
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Methodology & assumptions
- Interest calculated monthly on reducing balance using the stated annual rate.
- Snowball: debts ordered by ascending balance; freed EMI rolls into next smallest.
- Avalanche: debts ordered by descending interest rate; freed EMI rolls into next highest-rate.
- Lump-sum payments applied to the priority debt in the scheduled month, reducing principal immediately.
- Each debt's stated EMI is treated as the minimum; extra budget allocated per strategy.
- No prepayment penalties or processing fees are modeled.
- All figures are nominal — not inflation-adjusted.
This calculator is for informational purposes only and does not constitute financial advice. Actual loan terms, interest rates, and payoff timelines depend on your lender. Consult your bank or financial advisor before making financial decisions. Built by Kedil.