Plan your way out of debt, in the right order

Why debt payoff planning is harder than it looks

A single debt is arithmetic. Several debts at once is an allocation problem: any rupee you send to one balance is a rupee not sent to another, and the cost of that choice is invisible unless something models it.

It gets harder in India because a credit card is not one debt. A card can hold a revolving balance, fresh purchases, a cash advance and a card EMI at the same time — each with its own rate and its own treatment when a payment lands.

• —Minimum payments are a floor, not a plan — they are designed to keep an account current, not to clear it
• —Interest accrues on balances you may not think of as debt, such as a cash advance drawn months ago
• —A payment that looks large can still be smaller than the interest charged that cycle
• —Extra money released when one debt closes disappears into everyday spending unless it is deliberately redirected

Avalanche, snowball and hybrid

Every repayment strategy pays the minimum on everything and directs whatever is left over to one target debt. What separates them is how that target is chosen.

• —Avalanche targets the highest effective interest rate first. Mathematically it costs the least in interest over the full plan.
• —Snowball targets the smallest balance first. It usually costs more in interest, but closes accounts sooner, which some people need in order to keep going.
• —Hybrid scores each debt on both rate and balance, so a small, very expensive balance is not left sitting behind a large cheap one.
• —A lump sum — a bonus, an arrears payment, a maturity — is modelled separately, because where you apply it changes the outcome more than the monthly strategy does.

Negative amortisation: when paying does not reduce the balance

If the payment you make in a cycle is smaller than the interest and charges added in that cycle, the balance goes up even though money left your account. This is negative amortisation, and it is the single most common reason a card balance refuses to move.

NiyamPay checks for this explicitly and warns you when a planned payment is too small to reduce a balance at all, rather than quietly projecting a payoff date that cannot happen.

What a debt-free projection actually is

A projected debt-free date is the month a plan reaches a zero balance if the inputs hold: the rates stay as entered, no new borrowing happens, and the planned payment is made each cycle.

Change any of those and the date moves. That is normal, and it is why NiyamPay keeps a history of what you planned earlier and grades each cycle against the plan that was actually in force at the time, instead of rewriting the past.

How to build a plan in NiyamPay

• —Enter your monthly income and essential expenses so the plan works with what is genuinely available, not a hopeful number
• —Add every debt — cards, personal loans, EMIs — with balance, rate, minimum and due date
• —Compare strategies side by side, including the interest cost and time difference between them
• —Record payments as you make them and see exactly which part of a balance each payment reduced

FAQ

Common questions

Keep reading

Related guides