Debt Payoff Calculator
Plan your debt-free journey using snowball or avalanche methods to optimize your payments.
Your Debts
Credit Card
Rs. 50,000 @ 24%
Add a Debt
Extra Monthly Payment
Amount you can pay above minimum payments each month
Snowball (Lowest Balance First)
Smallest balance first
8
months
Avalanche (Highest Interest First)
Highest rate first
8
months
Recommendation
Both methods result in similar interest costs. Choose Snowball for quick wins or Avalanche for mathematical optimization.
How They Work
Snowball Method
Pay off smallest debts first for psychological wins. Great for motivation.
Avalanche Method
Pay off highest interest debts first. Mathematically optimal, saves most money.
Debt Payoff Strategy Comparison
Compare the two main debt payoff strategies to decide which works best for your situation. Both methods pay the same total debt — the difference is in order and psychology.
| Feature | Snowball Method | Avalanche Method |
|---|---|---|
| Order | Smallest balance first | Highest interest rate first |
| Total Interest Paid | Higher | Lower (mathematically optimal) |
| Time to First Win | Faster (small debts cleared quickly) | Slower (largest/highest-rate debt first) |
| Motivation | High (quick wins build momentum) | Lower (may feel slow initially) |
| Best For | Multiple small debts, motivation needed | Disciplined, mathematically focused |
| Sri Lanka Context | Good for multiple credit cards | Best when one debt has very high rate (28%+) |
Understanding Debt in Sri Lanka
Sri Lankan household debt has been rising, with credit cards and personal loans being the most common forms of high-interest debt. Understanding local debt patterns helps you make better payoff decisions.
Common High-Interest Debt Types in Sri Lanka
- Credit Cards: 24-28% annual interest. Minimum payment 5% of balance. Most expensive form of consumer debt.
- Personal Loans (unsecured): 16-24% from banks, 20-30% from finance companies. Short tenure (1-5 years).
- Leasing Balances: 12-18% effective rate. Vehicle leases are common and can be refinanced.
- Microfinance Loans: 24-40% effective rate. Predatory rates — prioritize paying these off first.
- Pawn Loans: 12-18% from state banks, higher from private. Risk of losing pledged jewelry.
Debt-to-Income Ratio Guidelines for Sri Lanka
- Healthy: Total monthly debt payments under 30% of gross monthly income
- Caution: 30-40% — reduce discretionary spending and focus on debt payoff
- Risky: 40-50% — consider consolidation and seek financial counseling
- Dangerous: 50%+ — high risk of default. Consider debt restructuring or insolvency options
Example: 3 debts with Rs. 10,000 extra payment
Sample Inputs
What This Calculator Does
This calculator compares the debt snowball and avalanche methods to help you become debt-free faster. Enter your debts and see which strategy saves more money and which gets you debt-free sooner.
- Compares snowball vs avalanche payoff strategies
- Calculates total interest paid for each method
- Shows payoff timeline for each debt
- Determines optimal payoff order
- Handles multiple debts with different rates
Inputs and Assumptions
Assumptions
- - Interest compounds monthly
- - Minimum payments remain constant
- - No new debt is added
- - Extra payments go to one debt at a time
Frequently Asked Questions
Related Resources
Disclaimer: This calculator provides estimates only. Actual payoff times may vary based on interest rate changes, fees, and payment timing. This is not financial advice.
Sources & methodology
Part of the Loans & Debt collection
How we calculate
Central Bank of Sri Lanka
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Methodology verified July 2026 against Central Bank of Sri Lanka · Attribution: CalcLK