Credit Card Unit Economics
Model the profitability of a single credit card account — interchange, interest, late fees, cost of funds, losses. Coming soon.
Coming soon
An interactive calculator for credit card unit economics is on the roadmap. The eventual tool will let you stress-test a single account across the levers that actually move portfolio profitability.
What this tool will model
Credit card economics are deceptively layered: revenue arrives from at least four streams (interchange, interest, late fees, annual fees) while costs accumulate across funding, losses, rewards, and servicing. A small change in revolve rate or net charge-off rate can flip an account from profitable to underwater.
Inputs will include:
- Average outstanding balance and revolve rate (% of balance carrying month-to-month vs. paid in full)
- APR and effective annual yield on revolving balances
- Net interchange rate (after rewards funding cost)
- Annual fee and late fee revenue per account
- Annual gross charge-off rate and recovery rate
- Cost of funds — the rate at which you fund the receivable
- Rewards earn rate and redemption cost
- Per-account servicing cost — issuance, fraud, customer support, compliance
Outputs will surface per-account annual revenue, fully-loaded cost, net profit per account, breakeven revolve rate, and sensitivity to the two biggest swing factors: charge-offs and cost of funds.
Use the full model in the meantime
The Google Sheets credit card model covers the same economics with broader portfolio assumptions including charge card economics (no revolve, interchange-only revenue) and the revenue ramp across a portfolio’s first 24 months.