This concept can show how your money can double in savings. It can also demonstrate the approximate amount of time it takes for your debt to double at a constant rate of return compounded over time.
Mary owes $10,000 on a loan, and the interest rate she’s charged is 12% per year compounded annually. If she doesn’t make any payments, at this interest rate it would take six years for the amount she owes to double.
Rule of thumb: Pay down debt quickly. And, make sure extra payments are applied to the principal.