How to use the credit card rewards calculator
- List your monthly spending by category on the card and the points per dollar each category earns.
- Enter what you think one point is worth in cents, the annual fee, and any statement credits you will really use.
- Add a sign-up bonus in points if there is one, which counts in the first year only.
- Read the points per year, their value and the net value after the fee and credits.
Formula
Points per year = spending per month x 12 x points per dollar, for each category
Value = points x cents per point / 100
Net value = value + credits you will use - annual fee
First year adds the value of the sign-up bonus points
For plain cash back, enter the percent as points per dollar and set a point to 1 cent.
A rewards card with a $95 fee
Spending is $600 a month at 3 points per dollar, $250 at 2, $150 at 1 and $500 at 1, which is $1,500 a month and $18,000 a year. That earns 21,600 + 6,000 + 1,800 + 6,000 = 35,400 points. At 1 cent each they are worth $354.00, and after the $95 fee the net is $259.00, or 1.44% of spending.
At 1.5 cents a point with a 20,000 point bonus, the points are worth $531.00, the net is $436.00 a year and the first year is $736.00.
What a point is worth
The value of a point is the biggest unknown. Cash back is worth exactly its face value, but points toward travel can be worth more or less depending on how you redeem them. Use your own number, based on what you actually do with points, not the highest value you have seen quoted.
The cents per point calculator turns a real booking into a value you can enter here. If you never redeem points well, use a lower value.
Fee, credits and balances
An annual fee has to be earned back by points and by credits that you would actually use. A credit you would not otherwise spend money on is not a saving. Count only the ones you would pay for anyway.
A card is a poor deal if you carry a balance, because interest can easily exceed rewards. See the credit card interest calculator and the credit card payoff calculator for that side. Spending caps, rotating categories and minimum spending for a bonus are not modeled, so check your card terms.
Assumptions and limits
- The earn rates, point value, fee and credits are numbers you enter, and the examples are only samples.
- Spending caps, rotating categories, minimum spend for a bonus, foreign fees and interest are not modeled.
- Spending is the same every month.
- The bonus is counted in the first year only.
Frequently asked questions
How do I calculate credit card rewards?
Multiply your yearly spending in each category by its points per dollar, add the points, and multiply by what a point is worth. Then subtract the annual fee and add credits you will use.
Is an annual fee card worth it?
It is when the value of the points and credits you would really use is larger than the fee. The net value figure shows exactly that difference for your spending.
What should I use as the value of a point?
Use what you actually get when you redeem. For cash back it is 1 cent per point. For travel points, work it out from real bookings, which the cents per point calculator can do.
Does the bonus count every year?
No. The sign-up bonus is counted in the first year only, so the yearly net value leaves it out.