How to choose a credit card with the NPV() function in a spreadsheet

In this post, we’ll show you how to compare different credit cards that have different sign-up bonuses, annual fees, rewards, etc. We’ll use the NPV function, which allows us to compare different streams of cash flows that come at different times.

A word of caution: Our post assumes that you’ll pay off your credit card in full each month. As we mentioned in our personal finance modeling post, the rate of return earned on investments is one of the key factors in achieving long term financial independence. We assumed getting a 4% return on our investments…the average interest rate you’d have to pay on a credit card balance is 15%! That’s like having a huge negative investment, which could keep you in the poor house.

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