What is the Cashback & Rewards?
Credit card rewards are only worth having if they exceed the annual fee. Most cards pay 0.5–2% on general spending with accelerated rates of 5–10% in select categories.
The number that matters is net benefit — rewards minus fee. A premium card charging ₹10,000 needs substantial spending before it pays for itself.
Formula & worked example
Net benefit = Annual rewards − annual fee
Break-even spend = Fee / (effective rate × 12)
Worked example: ₹45,000 monthly spend with ₹10,000 in a 5% category and ₹35,000 at 1.5% → ₹1,025 a month, or ₹12,300 a year. After a ₹5,000 fee the net benefit is ₹7,300, an effective rate of 2.28%. You would need about ₹18,300 of monthly spend just to cover the fee.
How to use this cashback & rewards calculator
- Enter total monthly card spending.
- Enter the base reward rate for general spending.
- Separate out spending in accelerated categories and its higher rate.
- Add the annual fee — check whether it is waived above a spending threshold.
Smart tips
- Rewards are worthless if you carry a balance. Card interest of 36–48% dwarfs any 2% reward.
- Many cards waive the annual fee above a spending threshold — check whether you qualify.
- Reward points are often worth less than face value. Calculate the rupee value per point before assuming.
- Match the card to your actual spending pattern, not to the most attractive advertised category.
- Cashback is simpler and more reliable than points, which can be devalued by the issuer at any time.
Frequently asked questions
Are credit card rewards worth it?
Only if the annual value exceeds the fee and you pay the balance in full. Carrying a balance at 36–48% wipes out any reward instantly.
What is a good cashback rate?
1–2% on general spending is typical in India. Accelerated categories can reach 5–10%, but usually with monthly caps.
How much do I need to spend to justify an annual fee?
Divide the fee by your effective reward rate. A ₹5,000 fee at 2.28% needs about ₹2.2 lakh of annual spending.
Are reward points as good as cashback?
Rarely. Points often carry redemption restrictions and can be devalued. Cashback is predictable and immediately usable.
Want the theory behind the numbers? Read our credit card guides on the Money Blog.