Cash Back Rewards Calculator
Calculate how much cash back you earn on purchases given a reward rate, and estimate annual savings based on your monthly spending.
How to use this tool
- Enter monthly spending, cash back rate, annual card fee, bonus category monthly spend and bonus category rate in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your annual net cash back (after fees) and the full breakdown beneath it.
Formula
Monthly Base Cash Back = Monthly Spend × Cash Back Rate
Monthly Bonus Cash Back = Bonus Spend × Bonus Rate
Annual Gross Cash Back = (Base + Bonus) × 12
Annual Net Cash Back = Annual Gross − Annual Fee
How it works
Cash back is calculated as a flat percentage of qualifying purchases. The base rate applies to all spending while a higher bonus rate may apply to selected categories such as groceries or gas. Annual gross rewards are the sum of both streams multiplied by 12 months.
The effective annual reward rate divides net cash back (after deducting the annual fee) by total annual spending, giving a true cost-adjusted return on spending. This assumes spending is consistent month to month and that all purchases qualify for the stated rates.
Worked example
2% Base Card with 5% Grocery Bonus
- Base monthly spend = $2,000 at 2%: $2,000 × 0.02 = $40/month.
- Bonus category spend = $500 at 5%: $500 × 0.05 = $25/month.
- Annual gross cash back = ($40 + $25) × 12 = $780.
- Subtract annual fee of $95: $780 − $95 = $685 net.
Annual net cash back is $685 after the $95 annual fee.
Key terms
- Cash Back Rate
- The percentage of qualifying purchase amounts returned to the cardholder as a cash reward.
- Bonus Category
- A spending category (e.g., groceries, gas, dining) that earns a higher cash back percentage than the standard rate.
- Effective Reward Rate
- Net annual rewards divided by total annual spending, accounting for annual fees; reflects the true return on spending.
- Annual Fee
- A yearly charge by the card issuer for maintaining the account, which reduces the net value of rewards earned.