Estimate what a rewards credit card is worth to you each year after the annual fee, value you will not redeem and other card costs.
Use this calculator to see whether a card's rewards cover its costs. First estimate the rewards in dollars: multiply your yearly spending in each category by the card's earn rate, respecting any annual cap, and convert points to dollars at the value you realistically get. The rewards worked examples show how.
How it works. Net value = rewards − (rewards × share lost) − annual fee − other costs. The share lost covers points you never redeem, points that expire and redemptions worth less than the value you assumed. Other costs are anything the card makes you pay that a no-fee card would not, above all interest on a carried balance.
Worked example (illustrative). A household earns $582 a year in rewards on a card with a $120 fee. If it expects to lose 5% of the value, the lost value is $29.10, so value lost plus fee is $149.10 and the net value is about $432.90. A no-fee card paying a flat 1% on the same $26,400 of spending would return $264. The fee card wins by about $169 a year. If the household also carried a $2,000 balance at 20.99% for a year, about $420 of interest would go in the last field, and the net value would fall to about $13.
Limits. The tool does not model welcome bonuses, insurance benefits or caps; add them to the rewards figure only if you will genuinely use them. Earn rates and fees in the example are illustrative, not offers. Check the information box on the application for the real annual fee.
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