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by RC_ITR 1453 days ago
> It's either the highest APR of any of your debt,

Yes, by your logic it is literally an infinite APR. $200 numerator / 0 years denominator. Doesn’t that imply that maybe your formula has some holes in it and this is a fundamentally different transaction (a take rate rather than an interest rate) than what you’re characterizing it as?
1 comments
josephcsible 1453 days ago
That equation is definitely wrong, but it's not the one that I've used anywhere.
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RC_ITR 1453 days ago
In your scenarios, your cash flow is -$1000 at time 0 if you pay with cash.
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josephcsible 1453 days ago
Okay, I think I see where you're coming from now. With the 2% reward from the credit card, using it today is -$980 today, and cash is -$1000 today. If you do the math to see what interest rate you'd need for paying cash to be the better option, you do indeed get an infinite APR. This matches with common sense: if your net cash flow is zero at all future times either way, you're always better off paying $980 today rather than $1000, no matter what interest rates are.
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