The Rule of 72
How it works
The Rule of 72 is a simple formula that can be used to approximate the number of years it will take for your money to double. You simply divide 72 by your interest rate.
Presto!
Like magic, the result is the number of years it will take your money to double.
72 ÷ interest rate =
years to double
Estimating doubles can help simplify money decisions. This is a practical formula.
It's All About The Interest Rate
The higher your interest rate, the fewer years it takes your money to double.
Select an interest rate:
72 ÷
%
= years to double
The Hazard of
Not Knowing the Rule of 72
The national average interest rate for savings accounts is .06%
.06%
Apply the rule of 72
72 ÷ .06% = 1200
Your money would double in
1200 years!
Compare that to
The national average interest rate for credit cards, which is over 16%
16%
Apply the rule of 72
72 ÷ 16% = 4.5
Your money would double in
4.5 years!
There's over $10 trillion of consumers' money stagnating in savings accounts averaging only .06% annual interest.
*valuepenguin.com/banking/average-savings-account-balance as of 11/11/2021
The Rule of 72 can help protect you from gimmicky promotions from banks, settling for opportunities that don’t give you the advantage, and taking on debt that might take forever to pay off.