Divide 72 by the yearly interest rate to estimate how many years it takes money to double. At 6%, it’s about 12 years; at 4%, about 18. It works the other way too: debt at 22% doubles in roughly 3 years if you don’t pay it down.
How accurate is it?
With yearly compounding, the shortcut is very close for rates between about 6% and 10%:
| Rate | Rule of 72 | Exact years to double |
|---|---|---|
| 2% | 36.0 | 35.0 |
| 4% | 18.0 | 17.7 |
| 6% | 12.0 | 11.9 |
| 8% | 9.0 | 9.0 |
| 10% | 7.2 | 7.3 |
| 12% | 6.0 | 6.1 |
| 22% | 3.3 | 3.5 |
The exact formula is years = ln(2) ÷ ln(1 + rate). For quick estimates, 72 is close enough.
Three ways to use it
- Savings: $10,000 at 6% doubles to about $20,000 in 12 years and grows to about $40,000 in 24.
- Inflation: at 3% inflation, prices double in about 24 years, so the same money buys roughly half as much.
- Debt: at 22% APR, an unpaid balance can double in about 3 to 3.5 years. That’s why paying only the minimum is so expensive.
Find the rate you’d need
Flip it around: divide 72 by the years. To double money in 10 years, you’d need about 7.2% a year. To double it in 5, about 14.4%. It’s a quick way to see whether a goal is realistic.
Limits of the rule
- It assumes the rate stays the same and that growth is reinvested.
- It’s less accurate at very low or very high rates; some people use 69 or 70 for continuous compounding.
- It doesn’t include fees, which lower the real rate.
To see how monthly contributions add up, see how much $100 a month grows.
The rule of 72 and inflation
Inflation works like interest in reverse. Dividing 72 by the inflation rate tells you roughly how long until prices double, and the same money buys half as much:
| Inflation | Rule of 72 | Exact years |
|---|---|---|
| 2% | 36 | 35.0 |
| 3% | 24 | 23.4 |
| 4% | 18 | 17.7 |
What it means for card debt
Card interest usually compounds monthly, which makes debt grow slightly faster than the rule suggests. $1,000 left unpaid at 22% APR grows to about $2,053 in 3.3 years and about $4,216 in 6.6 years; it actually doubles in about 3.2 years. Fees and penalty rates can make it faster still.
More questions
What is the rule of 72?
A shortcut that estimates how many years it takes money to double: divide 72 by the yearly rate.
How does the rule of 72 work with compound interest?
It’s an approximation of compound growth. It’s most accurate for rates around 6% to 10% with yearly compounding.
Rule of 72 vs. rule of 70: which is better?
Both are estimates. 70 or 69 is slightly better for low rates and continuous compounding; 72 is easier to divide and works well for typical rates.
Does the rule of 72 work for debt?
Yes. It shows how fast an unpaid balance grows. At 22% APR, about 3.3 years.
The bottom line
72 divided by the rate gives the years to double. Use it to see how savings grow, how inflation erodes money and how quickly high-interest debt gets out of hand.
Sources
This article is for educational purposes only and is not financial or investment advice. Rates are examples, not predictions.