What is the rule of 72 for credit card debt (and why does it matter)?

We've all heard about the dangers of credit card debt, but few people truly grasp how quickly this type of debt can spiral out of control. It typically starts with a small balance that you plan to pay off in the next month or two, but before you know it, the interest charges on that debt have doubled what you originally owed. Credit card companies win big by charging this type of compound interest, and if you're not paying attention, your debt can grow at an alarming rate.

This is where the rule of 72 comes in. This rule is a simple mental shortcut that helps you estimate how long it will take for your debt to double based on your interest rate. While this rule is commonly used in investing to gauge how fast money can grow, it's equally useful in understanding how fast card debt can balloon if left unchecked. If you're carrying a balance on your credit card and only making minimum payments, knowing the rule of 72 can be an eye-opener.

So what exactly is the rule of 72, how does it apply to credit card debt and why should it matter to you? Below, we'll break down the answers to these important questions.

Chat with a credit card debt expert about your options today.

What is the rule of 72 for credit card debt?

The rule of 72 is a straightforward formula that helps estimate how long it takes for your balance to double due to compound interest. The formula is simple:

• 72 ÷ interest rate = number of years for doubling

For example, if your credit card has an interest rate of 24%, you would divide 72 by 24, which equals 3. This means that if you don't make any payments, your debt will double in just three years due to accumulated interest.

Most credit cards currently have interest rates ranging from about 18% to 30%, depending on your credit profile, the type of card it is and other factors. Using the rule of 72, a credit card with a 20% interest rate would cause your debt to double in about 3.6 years (72 ÷ 20 = 3.6). If the rate is higher — say 30% — the debt would double in just 2.4 years. This highlights how dangerous high-rate credit card debt can be when left unpaid.

Now, you might be thinking, "Well, I make payments, so that doesn't apply to me." But even if you're making the minimum payments on your credit cards, a significant portion of what you pay is going toward the interest charges rather than reducing the principal. This means your credit card debt is still growing, just at a slightly slower rate.

Get help with your high-rate credit card debt now.

Why does the rule of 72 matter for my credit card debt?

The biggest reason this rule matters is that it illustrates how quickly unpaid credit card debt can grow. If you're only making the minimum payments, a balance that seems manageable today can become overwhelming in just a few years.

Understanding the rule of 72 helps put things into perspective. It shows why it's crucial to pay more than the minimum required each month. If you only pay the minimum, your credit card debt continues to accumulate interest, and before you know it, you could owe double what you initially borrowed.

Another important takeaway is how valuable it is to secure a lower interest rate. If you can reduce your credit card's interest rate — either by negotiating with your card issuer, transferring your balance to a lower-rate card, or consolidating your debt — you can slow down the doubling effect and pay off your debt more efficiently. For example, dropping your rate from 24% to 12% means your debt would take six years to double instead of just three. That, in turn, gives you more breathing room to tackle your payments.

The rule of 72 is also a powerful motivator to pay down your high-rate debt first. While many people follow the "debt snowball" method, which involves paying off the smallest credit card balances first for psychological wins, a more financially sound strategy is to focus on your high-rate debts first to prevent runaway growth.

The bottom line

Credit card debt is one of the most expensive forms of borrowing, and the rule of 72 highlights just how dangerous it can be when left unchecked. With the average credit card interest rate now hovering close to 23%, this type of debt can double in just a few years if you're not aggressively paying it down. By understanding how compound interest works against you, though, you can make smarter financial decisions, like paying more than the minimum, seeking lower interest rates and prioritizing your high-rate balances first.