Credit Card Economics Model
Build-your-own credit card unit economics — model revolve rate, APR, interchange, charge-offs, cost of funds, and rewards costs across credit and charge card products.
Make your own copy: open in Google Sheets → File → Make a copy.
How to use it
Credit card economics are deceptively layered. Revenue arrives from at least four streams — interchange, interest on revolving balances, late fees, and annual fees — while costs accumulate across funding, charge-offs, rewards, and servicing. A small move in revolve rate or net charge-off rate can flip a portfolio from profitable to underwater.
Key inputs to set:
- Average outstanding balance per active account — the revolving balance you expect to carry
- Revolve rate — % of accounts that carry a balance month-to-month vs. pay in full (“transactors”). Consumer portfolios typically run 30-50%
- APR — your annual rate on revolving balances
- Net interchange rate — interchange after subtracting the rewards funded out of interchange (1.5-2.5% net for general-purpose credit; lower for premium rewards cards)
- Annual gross charge-off rate — expected losses as % of receivables (super-prime under 2%, prime 3-5%, subprime 8-15%)
- Cost of funds — your debt facility rate
- Annual fee, late fee revenue, per-account servicing cost — the other lines
The output stacks gross revenue, minus rewards, minus charge-offs, minus cost of funds, minus servicing, to land on net per-account profit. The breakeven section surfaces the revolve rate and charge-off rate at which a portfolio flips negative.
Modeling assumptions
- Per-account, annual figures. Doesn’t model multi-year vintages or behavior changes over time
- Charge-offs are treated as a constant annual rate. Real-world losses follow a vintage curve (heavier in months 6–24)
- Rewards costs are modeled as a flat % of spend. Doesn’t break out category multipliers (e.g., 5% on travel)
- Promotional APR periods (0% intro offers) aren’t modeled
- For charge cards, set revolve rate to 0% — APR drops out; annual fee + interchange are the only revenue lines
Related
- How to launch a card product — the full playbook for taking a card from concept to live
- Credit Card Unit Economics calculator — interactive single-account model (coming soon)
- Bank Account Economics Model — for debit-led products
Also a big thank you to Matthew Goldman for providing the original foundational template for this model.