When you have several debts, a plan for which one to pay first, and how much of your income your debts take, makes it easier to clear them. There is no single right method; the right one is the one you can keep to.
Last reviewed on 19 October 2026.
Start with a list
For each debt write down the lender, the amount outstanding, the interest rate and the monthly payment. Your statements and loan account summaries show these.
Two common repayment orders
- Avalanche: pay the minimum on every debt and put any extra towards the debt with the highest interest rate. This usually costs the least interest.
- Snowball: pay the minimum on every debt and put any extra towards the smallest balance. You clear individual debts sooner, which some people find motivating, though it can cost more interest.
- In both, when a debt is cleared its payment moves to the next one.
Consolidation
Consolidation means taking one new loan to pay off several debts. It can lower the rate or the monthly payment, but a longer tenure or fees can make the total cost higher, and it helps only if the old cards are not used again. Compare both before deciding.
Debt-to-income ratio
Your debt-to-income ratio is the share of your monthly income that goes to debt payments. Lenders use similar measures, each in its own way. Watching it helps you judge whether new credit would strain your budget.
If you may miss payments
Contact your lender before a payment is missed and ask what options it offers. Borrow only from banks and other lenders regulated by RBI, and be cautious of offers to clear debts quickly for a fee.
Important limitations
- Every person's situation is different; for a serious debt problem consider speaking to your lender or a qualified adviser.
- This guide is general information. It does not promise any change in your credit score, an approval or a particular result.
Official resources
- RBI Complaint Management System (RBI Ombudsman) (opens in a new tab)File a free complaint against a bank, NBFC or credit information company that has not resolved your complaint.Complain to the company first; if there is no reply within 30 days or you are not satisfied, file within 90 days after that. Contact centre: 14448. Email: crpc@rbi.org.in.
Addresses checked on 19 October 2026.
Related
- Debt repayment planner (snowball and avalanche)List your debts and an extra monthly amount; compare the smallest-balance-first and highest-rate-first orders.
- Debt consolidation comparison calculatorCompare paying your debts as they are with one new loan that clears them: monthly payment, time and total cost.
- Debt-to-income ratio calculatorAdd up your monthly loan EMIs and other debt payments and see what share of your income they take.
- Responsible borrowing checklistPoints to think through before taking on new credit.
- Personal finance health checklistA quick look at the basics of your finances: income and spending, saving, an emergency fund, on-time payments, debt and insurance.
- Credit card interest, the minimum amount due and your rightsWhen interest is charged, what paying only the minimum costs, and what RBI requires of card issuers.
- Budgeting, saving and an emergency fundTracking income and spending, saving first, building an emergency fund and planning for goals.