Secret Trick to Paying Off Debt Faster – Quick Guide 2025

Have you ever felt like your debt is never-ending? You make monthly payments, but somehow, the balance barely moves. You’re not alone. Banks structure loans and credit cards to keep you paying for decades.

In India, credit card interest rates can reach up to 42% annually.

Let’s say you have a credit card balance of ₹2,00,000 with an annual interest rate of 36%. If you only pay the minimum of around ₹8,000 per month, clearing the debt would take you over 15 years. In total, you’d end up paying ₹3,60,000 in interest alone! That’s almost double your original debt.

But what if there was a way to beat the system? A simple trick that could help you eliminate debt years faster while saving lakhs in interest? That’s precisely what we’re about to uncover.

How Banks Profit Off Your Debt

Every loan, credit card, or EMI comes with interest, and this is where banks make their real money. The longer you take to repay, the more interest you earn. They don’t want you to pay off debt quickly; that would mean less profit for them.

For example, if you take a personal loan of ₹5,00,000 at 14% interest for 5 years, you’ll pay around ₹1,96,000 in total interest. That means, instead of repaying ₹5,00,000, you give the bank ₹6,96,000.

Now, imagine if you stretch this loan to 10 years. The bank makes even more because of compound interest.

Did you know Banks earn billions simply because people don’t realise how much extra they pay over time?

The Minimum Payment Myth

Credit card companies love advertising minimum payments as a “helpful” feature. The truth? It’s a trap designed to keep you in debt forever.

Consider this:

• Credit Card Debt: ₹1,50,000
• Interest Rate: 40% per annum
• Minimum Payment: 5% of the balance per month (~₹7,500)

If you only pay the minimum each month, it will take you almost 18 years to clear the debt. By the end, you would have paid ₹4,80,000 in interest alone!

Banks count on you making only the minimum payment so that they can squeeze out the maximum amount in interest.

Hidden Fees and Penalties

Most people assume interest is the only cost of debt. But banks charge additional fees that silently drain your money. Some of these include:

Here's a simplified table format that preserves the meaning of the information provided:

These fees can seem minor individually, but they can add up to significant amounts over time.

Read More – Debt Consolidation Hacks in 2025 – Smart Ways to Manage Multiple Loans

The Secret Trick Banks Don’t Want You to Know

Now that you know how banks trap you in debt, let’s talk about how you can escape faster. This isn’t about taking drastic measures but tiny, strategic moves that make a significant impact.

The Trick? Strategic Payment Methods

1. The Debt Snowball vs. Debt Avalanche Strategy

Two of the most effective ways to pay off debt faster are:

• Debt Snowball Method: Start by paying off the smallest debt first while making minimum payments on others. This builds motivation and clears debts quickly.
  
  
• Debt Avalanche Method: Focus on the highest-interest debt first. This saves the most money in interest over time.

Example Calculation: Debt Snowball vs. Debt Avalanche

Let’s say you have these debts:

If you follow the Debt Snowball method, you will clear the ₹50,000 credit card, then move on to the personal loan, and finally the car loan.

If you follow the Debt Avalanche method, you will target the 42% interest credit card first, then move to the personal loan, and finally the car loan.

In both cases, you pay more than the minimum on your target debt while making the minimum payment on others. This dramatically reduces repayment time and interest costs.

The Biweekly Payment Strategy

Instead of making one monthly payment, switch to biweekly payments.

Here’s why this works:

• Instead of 12 payments a year, you make 26 half-payments (13 full payments).
• This reduces interest buildup and shortens loan terms.

Biweekly Payment on a Loan

This table simplifies how switching to biweekly payments can benefit interest savings and reduce loan duration.

Rounding Up Payments to Reduce Interest Faster

A simple way to accelerate debt payoff is to round up your payments.

• If your EMI is ₹8,750, pay ₹9,000 instead.
• If your credit card bill is ₹5,200, round it to ₹6,000.

Over a year, these small extra payments add up to months’ worth, reducing both interest and repayment time.

Why Banks Hate These Strategies

• You pay off your debt faster = less interest for them.
• No missed payments = no penalty fees for them.
• They can’t keep you trapped in minimum payments anymore.

How Someone Cut Their Debt Payoff Time in Half

Raj had a home loan of ₹40,00,000 at 9% for 20 years. His EMI was around ₹35,990.

By switching to biweekly payments and rounding up by just ₹1,000 per month, he:

• Cleared the loan 6 years early.
• Saved nearly ₹7,00,000 in interest.

Small tweaks have a big impact!

Step-by-Step Guide to Using the Trick

So, you’ve learnt how banks make money off your debt and how small payment changes can speed up repayment. Now, let’s get into exactly how to do it. 

Follow these steps, and you could save lakhs in interest while becoming debt-free faster than you thought possible.

List Your Debts

The first step is getting everything on paper. Grab a notebook or open a spreadsheet and list out:

• The total balance you owe on each debt.
• The interest rate for each one.
• The minimum payment is required every month.

For example, if you have

• Credit Card: ₹75,000 at 40% interest, ₹3,500 minimum payment
• Personal Loan: ₹2,00,000 at 18% interest, ₹7,200 EMI
• Car Loan: ₹5,00,000 at 12% interest, ₹9,800 EMI

Just looking at these numbers helps you see the real problem. The higher the interest, the more money you’re burning.

Choose Your Strategy

Now, pick one of the two methods:

Debt Snowball Method

If you need quick motivation, the Debt Snowball Method works best. Start by paying off your smallest debt first while making minimum payments on others. Once cleared, move to the next smallest. For example, pay ₹75,000 credit card debt first, then focus on your loan and, later, the car loan.

Debt Avalanche Method: 

To save more money, use the Debt Avalanche Method. Pay off the highest-interest debt first while making minimum payments on others. This reduces overall interest costs. If your credit card has 40% interest, clear it before moving to a personal loan at 18% and then the car loan at 12%.

Adjust Your Payment Schedule

Instead of paying once a month, start making half-payments every two weeks. This simple trick:

• Adds a yearly full payment (26 half-payments = 13 full payments).
• Reduces interest faster, saving you months or even years on your loan.

Biweekly Payments on a ₹10,00,000 Loan

Switching to biweekly payments saves ₹60,000 and cuts 1.5 years off your loan.

Automate Extra Payments

You won’t always remember to make extra payments. So, set up auto-pay to:

• Round up every EMI (if your EMI is ₹9,800, round it to ₹10,000).
• Add an extra ₹500 or ₹1,000 to each payment automatically.

These small additions make a significant impact over time.

Cut Unnecessary Expenses

Take a hard look at where your money goes every month.

• Reduce food delivery orders from five times a week to two.
• Skip that ₹300 coffee and make it at home.
• Cancel unused subscriptions like streaming platforms you rarely watch.

Even cutting ₹3,000 a month adds up to ₹36,000 per year—which could quickly wipe out a small debt.

Negotiate Interest Rates

Most people don’t know this, but you can negotiate interest rates. If you have a good repayment history, banks might lower your rate.

• Call your credit card company and ask for a lower APR.
• Check if your loan can be refinanced to a lower interest rate.
• Move a high-interest loan to a lower-cost lender.

Even a 1-2% drop in interest can save you thousands over time.

Also Read - Smart Ways to Repay a Loan Faster Without Extra Charges

Side Hustles and Extra Income: Speed Up Repayment

Even an extra ₹8,000-₹10,000 a month from a side job can cut years off your loan.

• Freelance on weekends.
• Sell unused items online.
• Take up tutoring or consulting.

If you earn an extra ₹10,000 per month and add it to your debt payments, a ₹2,00,000 loan at 18% interest can be paid off in 14 months instead of 3 years.

Bonus Tips to Get Out of Debt Even Faster

Use Balance Transfer Cards to Reduce Interest

If you have high credit card debt, transferring it to a 0% balance transfer card can help. This stops interest for a few months, allowing you to pay only the principal. However, missing payments can lead to higher rates later. Always check the terms before choosing this option.

Lower Interest with Debt Consolidation Loans

A debt consolidation loan combines multiple debts into one with a lower interest rate. If you have 24%, 18%, and 12% loans, consolidating them into a 10% loan reduces costs. This method works best when the new rate is lower than your current one.

Save Money by Refinancing Loans

Refinancing a home or car loan at a lower interest rate can save lakhs over time. For example, reducing a 12% home loan to 9% cuts overall repayment costs. Since interest rates change, check with banks regularly to find better offers. Always review the new terms before refinancing.

Avoiding New Debt: Stay Out of the Trap

Clearing your debts is one thing. Staying debt-free is another.

• No more impulsive EMI purchases.
• If you can’t afford it in cash, don’t buy it.
• Use credit cards only if you can pay the full amount next month.

Financial Discipline

Paying off debt is a long journey. Tracking how much you save in interest every month keeps you motivated.

• Set small goals. Celebrate when you clear a debt.
• Remind yourself that financial freedom is worth it.

Take Control of Your Financial Future

Most people don’t realise that small changes can save them lakhs in interest. Banks won’t tell you this because they profit from your debt. But now, you know better.

Start today, list your debts, pick a strategy, adjust your payments, and stick to it. The sooner you take action, the sooner you’ll be debt-free.

FAQs

1. What is the fastest way to pay off debt in India?
Use the Debt Snowball or Debt Avalanche method while making biweekly payments.

2. Is it better to pay off high-interest debt first?
High-interest debt costs the most, so clearing it first saves more money.

3. How does making extra payments help with loans?
Extra payments reduce the principal faster, cutting both interest costs and tenure.

4. Can I negotiate my credit card interest rate?
Yes! Banks may lower your APR if you have a good repayment record.

5. What happens if I make two loan payments a month?
Your total interest drops, and you pay off months or years early.

6. Are balance transfer credit cards worth it?
Yes, if used correctly—they let you clear debt at 0% interest for a period.

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LoansJagat Team

We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?