The Rule of 72: Doubling Time Estimate
Divide 72 by your APY to estimate how many years it takes to double your money. At 4.75% APY: 72 / 4.75 = 15.2 years to double. At 0.10% APY: 72 / 0.10 = 720 years to double. This simple calculation immediately shows why HYSA rates matter so dramatically.
Rule of 72 doubling time estimates vs. actual
| APY | Years to Double (Rule of 72) | Actual Years |
|---|---|---|
| 0.10% | 720 years | 693 years |
| 1.00% | 72 years | 69.7 years |
| 3.00% | 24 years | 23.4 years |
| 5.00% | 14.4 years | 14.2 years |
| 7.20% | 10 years | 10.0 years |
The Monthly Interest Shortcut
Quick mental math: multiply your balance by the APY as a decimal and divide by 12. At $20,000 and 4.75% APY: $20,000 x 0.0475 / 12 = $79/month. Shortcut: for 5% APY, your monthly interest is roughly balance / 2,400. For $30,000: $30,000 / 2,400 = $12.50/month per $1,000 = $375/month total.
At 5.00% APY every $1,000 in your HYSA earns approximately $4.17/month or $50/year. This lets you instantly estimate any balance. $25,000 = 25 x $4.17 = $104/month in interest.
HYSA mental math shortcuts
| Mental Model | Formula | Example at $20K 4.75% |
|---|---|---|
| Annual interest estimate | Balance x APY% | $20,000 x 4.75% = $950/yr |
| Monthly interest estimate | Annual / 12 | $950 / 12 = $79/mo |
| Per-thousand benchmark | $50/yr per $1K at 5% | 20 x $50 = $1,000/yr (at 5%) |
| Rate gap cost | Balance x rate gap | $20K x 3% gap = $600/yr lost |
The Rate Gap Intuition
To estimate the annual cost of a rate gap: multiply your balance by the percentage difference as a decimal. At $30,000 with a 4.5% gap between your current bank and the best bank: $30,000 x 0.045 = $1,350 lost annually. This number alone usually motivates immediate action to switch.
- Rule of 72: divide 72 by APY to get years to double your money
- Monthly shortcut: balance x APY / 12 = monthly interest payment
- Annual shortcut: balance x APY = annual interest (simple approximation)
- Rate gap cost: balance x rate difference = annual opportunity cost of not switching
Verify Your Mental Math
Use our calculator to confirm your estimates and see the exact compound interest projections.