What your card's rewards are really worth — after the annual fee
| Category | Monthly Spend ($) | Earn Rate (%) |
|---|
Rewards cards are marketed in points, multipliers and lounge photography; the only honest unit is dollars per year, net of the fee. This calculator multiplies your actual category spending by your card's earn rates, subtracts the annual fee, and — most usefully — compares the result to the boring benchmark every rewards card must beat: a no-fee flat 2% cashback card.
Two of those terms hide the traps. Earn rate applies per category, and the bonus categories are always narrower than the ads imply (groceries usually excludes superstores, travel means booked-through-their-portal). Point value is the sneakiest: a "point" ranges from 0.5¢ (bad redemptions) to 2¢+ (optimized transfers). Cashback is fixed at 1¢ by definition — one reason it wins for most people.
| Redemption | Typical value per point | Notes |
|---|---|---|
| Statement credit / cashback | 1.0¢ (sometimes 0.6–0.8¢) | Simple, guaranteed |
| Travel portal booking | 1.0–1.5¢ | Card-dependent |
| Transfer to airline/hotel partners | 1.2–2.0¢+ | Requires knowledge and flexibility |
| Gift cards / merchandise | 0.5–0.8¢ | Usually the worst option |
If you'll realistically redeem for statement credits, set point value to 1.0¢ and let the math be honest.
The break-even figure the tool shows is the monthly spend at which rewards exactly cover the fee. Below it, the card costs you money regardless of the multipliers. Two more honesty checks:
Rewards are paid from interchange fees; interest is paid by you. Carrying a balance at 22% APR to earn 2% rewards is a 20% loss — no rewards strategy survives a carried balance. If you're carrying one, the Debt Payoff Calculator is worth more than every card on the market.
Frequently, if your spending matches its bonus categories. A 3%-on-groceries card needs about $265/month of grocery spend to cover $95 beyond what a flat 2% card would pay. The calculator's benchmark note runs this exact comparison for you.
The value you'll actually get, not the maximum possible: 1.0¢ if you redeem for cash or statement credits, 1.2–1.5¢ if you consistently book travel through portals, more only if you actively play the transfer-partner game.
Generally no — the IRS treats rewards from spending as a purchase rebate, not income. Sign-up bonuses earned without spending (bank-account-style bonuses) can be taxable.
It can add real value (a grocery card + a dining card + a flat 2% for the rest), at the cost of complexity. Run each card through this tool separately with only the spending you'd route to it.
Each application costs a hard inquiry and drops your average account age. Occasional new cards are fine; rapid cycles trip issuer rules (like Chase's 5/24) and dent scores — see the FICO Impact Simulator.
Yes — every figure is processed locally in your browser, never uploaded or stored.
If you don't enjoy optimizing: cashback, always — fixed value, no games. Points win only when you'll reliably redeem above ~1.3¢, which takes effort and flexible travel plans.
The card industry counts on you valuing points like trophies. Value them like dollars, subtract the fee, and beat the 2% benchmark or walk — this calculator makes that a 60-second decision.