Credit Card Rewards Calculator
| Monthly spend | Flat 2%/yr | 3x on 30% share/yr | Winner |
|---|---|---|---|
| $1,000 | $240 | $216 | flat card |
| $2,000 | $480 | $432 | flat card |
| $3,000 | $720 | $648 | flat card |
Rewards arithmetic has one honest baseline: a flat 2 percent cash-back card on everything, no categories, no caps. Every points program has to beat that number on your real spending mix to justify its complexity - and most of them do, but only in the two or three categories where they pay 3 to 5 times.
Bottom line: the math is spend times rate - 2,000 dollars a month at a flat 2 percent is 480 dollars a year, while a 3x dining-and-groceries card can beat it by a hundred if your dining share is real, and lose by more if it is not. Points only complicate the comparison when their value wanders; cash back is a dollar, points are an estimate.
The honest part: rewards are a rounding error next to interest. Carry a 2,000-dollar balance at 24 percent APR and the 480 dollars of rewards pays for one month of carrying cost - the calculator assumes the balance is paid in full, because that is the only world where rewards arithmetic means anything at all.
How to use
- Enter your honest monthly spend per category - the statement average, not the aspirational one - and read the flat-rate baseline first.
- Compare the bonus-card estimate: multiply each category by its bonus rate, everything else at 1 percent, and see which structure actually pays your mix.
- Check the interest line: if the balance is not paid in full, the rewards section is a rounding error on the interest section, and the right card is the one with the lowest APR.
Frequently asked questions
Is 2 percent cash back good?
Two percent flat with no categories and no annual fee is the benchmark every rewards card competes against - it beats most bonus cards until your bonus-category spending is large and consistent. A 3x dining card needs about a third of your spending in restaurants to win; the flat card wins on simplicity, and simple cards get used for every purchase, which is where the real total comes from.
Are credit card points worth more than cash back?
Sometimes - a point is worth about a cent in most portal redemptions, 1.5 to 2 cents in transfer-partner sweet spots, and sometimes half a cent in the gift-card catalog. Cash back is always a full dollar per dollar. Points reward optimizers who redeem carefully; cash back pays everyone the same, which is why the honest comparison values points at a cent and lets the transfer game be a bonus.
Do rewards get taxed?
Cash back and statement credits from spending are treated as a rebate, not income - no tax. Sign-up bonuses from spending are generally the same; bank bonuses for deposits can trigger a 1099. The rules drift, so the honest planning answer is: assume spending rewards are untaxed, and read the form if one arrives.
What kills a rewards strategy fastest?
Carrying a balance: at 24 percent APR, one month of carried interest erases a year of 2 percent rewards on the same spending. Second place goes to the annual fee on a card whose bonus categories you do not hit, and third to spending extra to chase a category - the 500 dollars you spent to earn 15 dollars of bonus is the classic rewards trap.