How to use the credit card rewards calculator
The inputs: The “Monthly Spend” amount is the only required input to generate a list of results. Expanding the “Spend Categories” menu lets you tailor the results even further by entering your monthly credit card spending amounts in key categories (such as Dining, Entertainment, Gas, Groceries, Pharmacy, Travel, Online Shopping, Utilities, Transit, Streaming Services and more). We strongly urge you to do so, since a lot of cards pay elevated rewards rates on purchases in certain categories which can affect how much cash back you’ll really earn. "Filter Results" lets you hand-pick the cards you see.
The math: When you tap in how much you spend per month for each of the spending categories, we apply each provider's rewards rate for that spend type to calculate the “Cash Back Per Year” amount. To ensure the most accurate results, we factor in rewards program spending category bonus rates, rewards spending caps and default rewards rates, when applicable. If a card charges an annual fee, that amount is backed out of the total annual rewards figure.
The extras: Clicking “Apply Now” will take you to that credit card’s application page. But before that, you might want to take a gander at our homework. Click “Dayana’s Take” for a high-level overview of each card’s reward program and our likes and dislikes.
Note: The results include all of the rewards cards in our database, listed in descending order of the amount each card is expected to pay out annually based on the spending inputs. Click "View More" to see the full list of results. (See “Methodology” below for more.)
How do you calculate the reward rate for credit cards?
Not all credit card rewards are created equal. Points or percentage cash back earned can vary from card to card depending on each loyalty program's rules. But a few mathematical shortcuts make it easy to calculate and compare reward rates.
Calculating cashback credit card rewards
Cashback credit cards that pay a percentage of each purchase back to you are the easiest reward rates to calculate.
To convert a 1.5%, 3%, or 5% cashback rate into dollar terms, divide the cashback percentage number by 100. For example, a card that pays 1.5% cash back on all qualifying purchases has a rewards rate of $0.015 (1.5 divided by 100) per $1 spent. A card offering 3% cash back pays you $0.03 for each dollar you spend; 5% nets you $0.05, and so on.
The above math works for a card that offers the same rewards rate for all purchases. But there are other reward structures that aren’t as straightforward and require a bit of reverse engineering to calculate.
Here’s how to calculate the rewards rate per $1 spent on cards with different bonus tiers or caps on how much you can earn: Divide the total amount you earned in rewards by the amount you spent to earn it.
- Rewards rate example of a card with bonus spending categories: Let’s say you use a card that offers elevated cashback rates on groceries (3%) and gas (2%) and 1.5% on everything else. During the month you spend $400 at the supermarket (earning $12 in rewards), $100 on gas ($2) and $500 on other stuff ($7.50). Your total rewards rate — $21.50 divided by the $1,000 you spent — is $0.0215 per dollar. Multiply that by 100 and you’ve got your cashback rewards rate percentage: 2.15%.
- Rewards rate example of a card with spending caps: You spend $1,000 one month on groceries (because you’re hosting a visiting rugby team for a few weeks) using a card that offers 5% cash back on groceries up to $500 a quarter, and 1% cash back on amounts above that. You get $30 cash back on your big grocery splurge — $25 at the 3% rate, $5 cash back for the amount that didn’t qualify for the bonus rate. Your total rewards rate comes to 3% ($30 divided by $1,000 = $0.03 back per $1 spent.).
Calculating points-based credit card rewards
To figure out the reward rate on a credit card that rewards you points on your spending, you need to know 1) how many points you get per $1 spent and 2) the cost of the item your points can buy.
Here’s the math: divide the value of the reward (what it would cost to purchase the item outright) by the number of points required to redeem it to calculate the point value.
- Rewards rate example for credit card points: If you earn 1 point for every dollar you spend, and it takes 50,000 points to cover a $500 plane ticket, each point is worth one cent, which equals a 1% rewards rate..
Calculating the rewards rate on a points-based credit card gets tricky quickly depending on a card’s setup and your redemption options. Cards may award the same number of points on all purchases (e.g., one point for each $1 spent), or have a category-based points system (e.g., four points for each dollar spent at hotels, three points for airfare, two for gas, etc.). Check your rewards card agreement for details. Similarly, points can be worth different amounts based on what you redeem them for.
The goal is to redeem points for the highest-value reward, which may require putting in some elbow grease to manage your options. But if points math makes your head spin, a straight-up cashback credit card is a straightforward — and still highly rewarding — option to consider.
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Explore investor.com's full coverage of credit cards, including in-depth, expert reviews of popular cards and head-to-head comparisons of the cards that will give you the best cashback rewards, based on your actual spending.
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Is it worth getting a credit card that offers 2% cash back?
If you like free money, a 2% cashback credit card is worth your while. Spend $1,000 a month on such a card, and you’ll earn $240 in genuine spendable cash (or a statement credit) per year.
Here’s what else is worthwhile about a credit card offering 2% cash back on purchases:
- Simple to use: Plunk down card, earn 2% cash back, lather, rinse, pay it off in full (that’s key), and repeat every month. If the card is an unlimited 2% cashback card (as in no caps on the amount of spending that can earn rewards), there’s no limit to how much you can earn. That said, don’t overdo it. You’re not training for a spot on the rewards card spending Olympic team. Stick to using the card for stuff you’re planning to buy anyway and can afford to pay off.
- Straightforward rewards math: Unlike cards that offer different rewards rates on different spending categories — or the even more confusing travel cards with complex points-based systems — a flat-rate 2% cashback card pays you 2 cents for every $1 you spend. That’s $2 back for every $100 you spend, $20 when you put $1,000 on the card, and so on.
- Easy redemption options: No need to horde points or miles to extract the money you’ve earned. Simply ask for your cash — either redeem it as a statement credit (fastest/easiest) or request a check. For the latter note that there may be a minimum redemption requirement, usually around $25.
- Plenty of no-annual-fee options: Every dollar you pay towards an annual fee reduces the rewardi-ness of a rewards credit card. Luckily, there are a lot of cashback rewards cards with $0 annual fees.
- May come with a rewards booster: Sometimes a 2% rewards card is worth more than 2%, at least for a little while. For example, there are cards that offer cash welcome bonuses after you spend a certain amount during the first months after signup, effectively turning a 2% cashback rate into a 2%-plus rate on all purchases during the bonus window. Some cards also offer elevated rewards rates when you spend money at a partner retailer or book travel through a card’s rewards portal.
There are times, however, when a 2% cash back card isn’t worth it:
- A bad option if you carry a balance: Like, ever. Rewards cards generally have higher APRs than non-rewards plastic. With average credit card interest rates tracking well above 20%, a 2% cashback rewards rate amounts to chump change to what you’ll pay on a revolving balance on the card.
- Rewards earning caps are a buzzkill: Some cards cap the amount of spending (per quarter or per year) that’s eligible to receive rewards. (FYI: We account for spending caps in our credit card finder tool.) If you’re a big spender, “unlimited cash back” are the magic words to look for. Otherwise you may shortchange your rewards-earning potential.
- You may be able to do better: A 2% reward rate is decent. But a cashback card that pays, for example, 3% on groceries and gas, 2% on travel and 1% on everything else — or any number of other reward permutations out there — may be a more profitable option for you. Again, the investor.com card comparison tool lets you see exactly what you’ll earn using different rewards cards.
What is the smartest way to use a credit card that has rewards?
The best way to use a rewards credit card is to choose the most profitable card for your spending habits, put all your purchases on it, and pay off the balance in full each month.
Let’s unpack this advice point by point:
- Find the most profitable card for you. Best not to base your decision solely on a credit card’s marketing copy. The true worth of a rewards card comes down to how you use it. This could be as simple as choosing a flat-rate cashback credit card that pays you the same rewards rate on every purchase you make. A tiered-rate rewards card that pays a higher rate on certain spending categories (like gas, groceries, travel, etc.) is worth considering if the bonus categories align with your biggest expenses. (Our credit card finder tool crunches the numbers — your numbers, specifically — to find the most profitable card for you.
- Put all your spending on the card. When it comes to rewards cards, you get back (a percentage of) what you put onto them. Rewards card maximizers put as much of their purchases on plastic as they can. That means dissing the debit card and eschewing cash at the cash register. That said, don’t let a 5% rewards rate tempt you into buying some straight-to-the-junk-drawer $30 doodad you don’t need just to earn a buck fifty back in cash. Ditto for any spending requirements to earn a sign-up bonus. Only use a rewards card for purchases you’re planning to make regardless of the rewards, and that you can pay off in full when you get your bill, which leads us to ...
- Pay off the balance every month. Rewards cards aren’t known for having low interest rates. While some rewards cards offer 0% introductory APRs on new purchases, after the grace period, be prepared to pay a higher interest rate on revolving balances than you would if you used a non-rewards card. Letting a balance linger even one month can easily cancel out any rewards you earn, and cost you more in the long run than using a low-interest non-rewards credit card.
» Check out Ask investor.com: How many credit cards should I have?
Here are some additional tips to elevate your rewards card game:
- Designate your go-to card for certain purchases. Rewards cards often pay different cashback bonus rates on different spending categories. If you have multiple cards, it pays to be strategic about which card you whip out for what purchases. Stick a Post-it note with spending instructions on each card as a reminder. On errand day you’ll know which card to use at the gas pump and which one to reach for at the grocery store.
- Beware of bonus spending caps. Some consumer credit cards cap the amount of spending — overall or by category — that’s eligible for a bonus (higher) rewards rate. Once you hit the cap, the rewards rate dials back (typically to 1% or 1.5%) on purchases that exceed that amount. Not a big spender? Then this may not be a big deal. Otherwise, you may need to plan ahead to get the best rewards rate by, for example, postponing a large purchase in a bonus category you’ve already maxed out until the clock resets.
- Get familiar with your lender’s spending category definitions. For example, most rewards cards don’t recognize food purchased at Costco, Target or other warehouse clubs or superstores as “grocery store” purchases. That spending would only qualify for the card’s default rewards rate. And the definition of “travel” and “entertainment” purchases can be either very broad or very narrow, depending on how a credit card company defines them. This setup can lead to lower rewards than expected if you’re expecting the higher “travel” rewards rate on a train ticket when the lender considers it a “transportation” purchase instead. The rules and exceptions are spelled out in the fine print — a must-read, especially before making large purchases on which you’re hoping to get a baller rewards rate.
- Activate quarterly bonus categories. Cards with rotating bonus categories may require additional management. For example, the Chase Freedom Flex card offers 5% cash back on a new spending category each quarter. But you have to remember to opt in to earn it. The Discover it Cash Back card also sports a quarterly rotating 5% bonus setup. (Set up calendar reminders so you don’t miss out on earning extra cash.) To further juice your rewards, try to time your spending to coincide with a card’s bonus rewards schedule.
- Redeem your points for the highest value rewards. If you have the choice, that is. On cashback rewards cards the standard (and fastest) way to claim your rewards is to opt for a statement credit. (Note, these credits don’t count against the minimum payment due.) Some rewards credit card issuers allow you to use your earnings for items in their own mall (merch or gift cards); on partner offers (e.g., travel); transfer to another cardholder in the same rewards ecosystem; or even donate your earnings to charity. Do the redemption math (see above and read the card’s reward redemption rules) to make sure the exchange is equal to or better than what you’d get by simply getting the cash back.
Our mission at investor.com is simple: provide thorough and unbiased reviews of financial products and service providers. But, boy, do we have opinions. And those opinions are based on unparalleled research and reams of data.
We spent forever and a day (including some weekends and a minor holiday or two) gathering dozens of data points on the rewards cards that power the investor.com Credit Card Rewards Calculator comparison tool. Based on the monthly spending amounts you enter, we calculate how much each credit card’s reward program would pay out per year. (See how under “About the results,” below.)
Here’s what we don’t do: We don’t let any credit card company pay for higher placement in the results list. We don’t let providers buy additional links to their card sign-up page. We don’t make any money through affiliate relationships if you apply for a rewards card via one of our pages. When we say something nice about a credit card, it’s because the data led us to that conclusion.
That’s the TL;DR of it. Read on for more about the behind-the-scenes machinations that power our best rewards credit card recommendations.
About the results
The investor.com credit card rewards calculator results are listed in descending order of the value of the annual rewards you can expect to receive based on your inputs. All of the credit card providers in our database are included in the results list, even if the “Cash Back Per Year” payout is weak sauce. (Click “View More” to see the full list of credit cards. And please email us if there’s a card you want to see in the list.)
The calculator results are based on the monthly spending amounts you enter and the annual dollar value of the rewards each credit card program pays per $1 spent. Credit card companies often express this payout amount as a percentage (e.g., 1.5% of every dollar spent) or on a points basis (e.g., 1.5 points for every dollar spent). We converted all of them to a dollar amount (“Cash Back Per Year”) to make comparing offers easier.
To calculate the amount of cash back you could earn per year, we factored in:
- Spend category inputs: The default dollar values for each “Spend Category” in the Best Cashback Credit Cards tool — gas, groceries, travel, restaurant, entertainment, pharmacy, other — are based on average American spending data from the Consumer Expenditure Surveys from the U.S. Bureau of Labor Statistics. We include additional spend categories (such as streaming services, online shopping, utilities, transit, Amazon and more) to help you see which rewards cards are most closely aligned with your actual spending patterns. We encourage you to customize the monthly spend inputs for the most accurate results.
- Tiered rewards rates: If a rewards credit card pays higher cashback rates on certain spending categories (also called “Bonus Rewards”), that difference is reflected in the total “Cash Back Per Year” tally.
- Rewards spending caps: Some cards impose category- or time-based limits (monthly, quarterly, annually) that affect the amount of rewards you can earn. For example, a card may pay 3% cashback on groceries on up to $1,000 of spending each quarter, then revert to the base/default rewards rate until the following quarter. We accounted for bonus spending caps and timeframe in the calculations.
- Default rewards rates: Purchases that exceed a spending cap are usually subject to a lower default rewards rate (e.g. 1% or 1.5%). We mathed that out here, as well.
- Annual fees: If a rewards card charges an annual fee, we deducted that amount from the “Cash Back Per Year” total to provide a true accounting of a card’s annual rewards payout.
What’s not included in the “Cashback Per Year” total is the cash value of any sign-up/welcome bonus. We highlight any welcome bonus separately. While sign-up bonuses can be the most lucrative part of getting a new cashback rewards credit card, not everyone will want or be able to do what it takes to earn the extra cash. (It usually requires spending a certain amount in a specified time period after the card is activated.)
Other data points we collect on each rewards card include: Fees (annual, balance transfer, cash advance, late/returned payment, foreign transactions), reward redemption options, introductory APRs for purchases and/or balance transfers, perks, quirks, and our own take on the merits of each card.
Expand the results for more information to help you pick the best cashback credit card for your needs.
Note: We strive for perfection on these pages and conduct regular data audits to ensure accuracy. However, credit card issuers occasionally deign to update their offerings and card terms without giving us a courtesy heads-up. To prevent outdated information from ruining your day, we include links to each credit card’s disclosures and terms and conditions sheets for the latest and greatest in lawyered-up fine print.
Drop us a line: We regularly add new cards to our database. Let us know if there’s a credit card rewards program you’d like to see included by emailing us.
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