Calculating cash back credit card rewards

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Credit Card Applications » Research » Guides » Travel with Credit Cards » Calculating cash back credit card rewards

Calculating cash back credit card rewards


Updated: December 26, 2012

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One of the many benefits of using credit cards is the different rewards that can be availed through them. The rewards are associated with the purchase of items and they benefit both the customers as well as the credit card companies. On one hand the customers get to enjoy the different types of rewards and on the other the credit card company can remain assured that the use of their card will remain a steady source of interest earning for the company.

Need to calculate cash back credit card reward points

The reward points offered by different companies stand to be a major factor when customers choose a card for their use since various companies have different types of rewards for credit card users. It can either be in the form of cash back, airline free miles or discounts at gas stations or other eateries etc. Of all the reward types, cash back is the most popular among customers.

Many credit card companies do not declare openly the percentage of cash back that a customer is eligible for when he scores a certain amount of reward points. Before making a deal with a credit card company it is therefore pertinent that you understand the calculation parameters followed by the company when calculating the reward points. This would help the customer remain aware of his dues and also calculate his cash back amount.

Method of calculation

Follow a simple method to calculate to know your cash back reward points.

  1. The first step is to understand from the company representative the rate at which a customer earns points on every usage of credit card. More simply, understand the amount of reward points earned for every dollar used on the card.
  2. The credit statement will show you how many points have been earned by you. Calculate the money spent in earning the reward points by dividing the reward points with the rate prescribed. This will give you the amount of money spent in earning this reward point.
  3. This amount can be tallied when compared to the transaction statement issued by the credit card company.
  4. To get the percentage of cash back that is being rewarded for spending of a single dollar, divide the reward points with the results of step two. Move the decimal two places to the right to get the actual cash back percentage.

These calculations will help the customer to choose a card on the basis of the reward points offered. This knowledge will also help them stay aware of their dues and file for any discrepancy if found on the part of the credit card company.

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