Free tool
Cashback-versus-Interest Calculator
Does the reward survive contact with the interest?
Reward cards are only worth having if you clear the balance. This shows the arithmetic honestly, including the plan fee, so you can see the point at which cashback stops being a benefit.
Last reviewed:
Your result
£600
Net annual benefit
Positive only because you clear most of the balance. That assumption is doing all the work.
- Rewards earned
- £600
- Annual plan fee
- £0
- Estimated interest cost
- £0
- Net position
- £600
- Balance at which rewards are wiped out
- £2,000
Carrying even a modest balance usually erases a full year of cashback. That is the single most important line above.
If you cannot commit to a full direct debit every month, a reward card is the wrong tool regardless of the headline rate.
How to read the result safely
Use annual spend you would make anyway, not a target created to earn rewards. Take the reward rate, annual fee and APR from the provider’s current terms, and use an honest average balance if you sometimes carry debt. A headline reward rate is not a return on cash: it is a small rebate on spending that still has to be repaid.
The calculation subtracts the estimated interest and annual fee from the reward. A positive result is not a recommendation and does not prove that a card is affordable. It only means the figures entered produce a positive arithmetic result under this simple model. If you expect to carry any balance, the tool suppresses the credit-product offer because the borrowing cost and cash-flow risk need to be resolved first.
The break-even balance is a warning indicator, not a permitted borrowing limit. It does not model promotional rates, minimum payments, compounding, transaction fees, reward caps, excluded spend, late charges, credit limits, personal guarantees or changes to provider terms. Read the full agreement and check the current product terms before applying.
- Check the result against a 13-week cash forecast: full repayment must remain possible after payroll, tax and committed bills.
- Re-run the model if the fee, reward cap, APR, repayment pattern or expected spend changes.
- If the result is negative, or if repayment depends on a future customer receipt, use the related business-spending guidance instead of treating rewards as a funding plan.
Assumptions this tool makes
- Interest is estimated on the average balance carried across the year at the annual rate you enter.
- It uses the APR you supply from your own card terms. We do not supply or estimate an APR for any product.
- Reward rates and caps vary by provider; enter your own.
The formulas used
- annual_reward = annual_spend x reward_rate
- annual_interest = average_balance_carried x apr
- net_benefit = annual_reward - annual_interest - annual_fee
Estimates only. This is a planning aid, not regulated financial advice, tax advice or a personal recommendation. Figures are rounded deliberately to avoid false precision. Your answers stay in your browser: nothing you type here is sent to us, to a partner or to an advertising platform. Read the full disclaimer.