Cashback Calculator
Maximize your credit card rewards. This calculator computes monthly and annual cash returns based on your spending volume and determines whether premium cards with annual fees justify their cost.
Average monthly eligible credit card charges
Flat-rate or weighted category cashback percentage
Yearly membership fee charged by the card issuer
Total annual cashback retained after subtracting the annual fee
How to Use This Calculator
- Enter your estimated monthly card spend across eligible purchase categories.
- Enter the cards cashback earning rate (e.g. 2% for flat-rate cards, 3% - 6% for groceries/gas).
- Input the cards yearly annual fee ($0 for no-fee cards, $95 for mid-tier rewards cards).
- Review your net annual cash return to confirm whether the card fee pays for itself.
Formula & Calculation Methodology
Evaluates whether total rewards generated through credit card merchant interchange rebates exceed the recurring cost of card membership.
Worked Example
$2,500 monthly spend at 2% flat cashback with a $95 annual fee
Frequently Asked Questions
How does a 2% flat cash card compare to a 5% rotating category card?↓
A 2% flat card offers simplicity and consistent rewards across all purchases without spending caps. 5% rotating cards yield higher returns in specific quarters (e.g., groceries or Amazon) but usually cap bonus rewards at $1,500 per quarter.
Is cashback considered taxable income by the IRS?↓
In the United States, cashback earned on purchases is legally classified as a non-taxable rebate or discount on purchase price. However, bank account opening bonuses without spend requirements are treated as taxable 1099-INT interest.
When does an annual fee card make financial sense?↓
An annual fee card makes sense when the extra cashback percentage or supplementary statement credits (dining, travel, streaming) exceed the fee. For example, spending $10k annually on a 6% card ($600) beats a 2% no-fee card ($200) even after paying a $95 fee ($505 net).
What is the biggest risk of using cashback credit cards?↓
Carrying a revolving balance. Credit card interest rates (typically 20% - 28% APR) completely wipe out a 2% - 5% cashback reward in less than two months if the balance is not paid in full each cycle.
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Source Citation & Disclaimer
Informational tool only; not licensed tax, legal, or financial advice.