Cashback Calculator

When you get what you pay for

Showing the "cashback crossover", when there is enough monthly spending to justify a credit card's monthly cost.

Method

I wanted to better understand when it is worthwhile to pay for rewards from a credit card, specifically cash back. How much spending is needed to pay for the fee incurred by a pricier card? Here's a basic inequality:

Where:

• is the amount spent
• is the rate of cashback for the card with a fee
• is the rate of cashback for the card without a fee
• is the cost of the card with a fee

Reordering, we get:

So, if a card costs $5/month and the difference between the two cards cash back rates is 1%, the pivot would be at $500. In other words, if you spend more than five hundred dollars per month, the 1% increase in cash back will give you more money back.

Test notebook on Observable

2025-03-12