When to use it
Use it to quickly grasp the long-term effect of interest on savings or debt.
How to apply it
- Find the annual interest rate on the savings or debt.
- Divide 72 by that rate.
- Read the result as the approximate number of years for the amount to double.
- Apply it to debts to see how quickly unpaid balances can grow.
- Use it to compare options, not as a precise calculation.
Tip: The rule is an approximation and is less accurate at very high or very low rates.