The Rule of 72 turns an interest rate into the years it takes money, or debt, to double. Divide 72 by the rate for a rough answer in seconds. Run it on your savings rate, your investment return after fees, and your highest credit card rate, then fix the one costing you the most.
Percentages make rate gaps look small. A savings account paying 0.4% and one paying 4% sound a few points apart, and a 1% investment fee sounds trivial.
Years make the same gaps obvious. Investor.gov, the SEC’s investor education site, uses a 9% return as its example. Divide 72 by 9 and you get 8, so money earning 9% doubles about every eight years. The same division works on what you owe and on inflation, which cuts what your cash can buy.
Here’s what the rule shows in four everyday cases.
- Savings earning 4% double in about 18 years. At 0.4%, they take about 180.
- An investment returning 7% doubles in about 10 years. A 1% yearly fee that trims the return to 6% stretches that to 12.
- A $1,000 credit card balance at 24% interest grows to about $2,000 in three years if nothing is paid.
- At 3% inflation, cash loses half its buying power in about 24 years, long before savings at 0.4% come close to doubling.
Treat each answer as an estimate for quick comparisons, not a substitute for a calculator. The rule assumes the rate holds steady and that nothing is added or withdrawn.
To run the rule on your own money, find three numbers: your savings rate, the return you expect on your investments after fees, and the interest rate on your most expensive credit card.
Divide 72 by each and compare the answers with the ones above. If any debt you carry doubles in a few years, like that card balance, fix it first.
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