How the avalanche method works
Pay the minimum on every debt, then send all extra money to the debt with the highest interest rate. When it's cleared, move that payment to the next highest rate. Because the most expensive debt shrinks first, less interest accumulates overall. Mathematically, no other order costs less.
Worked example
1. Add interest to every debt
2. Pay every minimum
3. Put what's left on the highest-rate debtWhere the avalanche shines in India
Indian debts often have very different rates: credit cards at 40–50% a year, personal loans at 12–18%, and home loans at 8–9%. With gaps that wide, the order matters a lot. A typical avalanche plan clears credit cards first, then personal and consumer loans, and leaves the cheap, long home loan to run on its normal EMI.
Staying motivated
The avalanche's weakness is that your first win can take a while if the highest-rate debt is also large. A few ways to keep going:
- Track the total debt falling each month, not just individual balances; the chart above does this.
- Celebrate milestones such as every ₹25,000 cleared.
- If a small debt is close to zero, clearing it first costs very little extra. Compare with the snowball calculator.
Consolidating expensive card debt into a single lower-rate personal loan can also help. It lowers the rate on the largest chunk and leaves one EMI to manage.
Before you start
Check whether any debt can be refinanced to a lower rate first. Moving a ₹60,000 card balance at 42% into a 13–15% EMI conversion changes which debt is the most expensive, and makes the whole plan cheaper. Then run the avalanche on the new rates.
Frequently asked questions
Is avalanche always cheaper than snowball?
It is never more expensive, and it saves money whenever the highest-rate debt is not also the smallest.
Should my home loan be part of this plan?
Usually not. At 8–9% it's your cheapest debt; keep paying its normal EMI and focus extra money on costlier debts.
How are minimum payments treated?
They stay fixed at what you enter. When a debt is cleared, its minimum is added to the extra payment for the next debt.