Is five percent always better than one and a half?

Only below the cap. A five percent card capped at 1,000 a month stops at 12,000 a year, which an uncapped 1.5 percent card passes at a monthly spend of about 67,000.

Everydayfinance

Cashback Comparison Calculator

Two cashback cards compared with caps applied. A capped five percent card loses to an uncapped one and a half percent card above a certain spend, and that crossover point is the whole comparison.

Also called: cashback card comparison, which cashback card.

Better card

The second card is better

The second card is better, by ₹800 a year. The first nets ₹9,500 and the second ₹10,300. Above about 55555.56 a month the uncapped card wins, because the capped one stops earning.

First card, net of fee

₹9,500

Second card, net of fee

₹10,300

Annual difference

₹800

First card effective rate

1.32%

Second card effective rate

1.43%

Monthly spend where they tie

₹55,556

On the crossover

Above about 55555.56 a month the uncapped card wins, because the capped one stops earning.

How this is calculated

Method and background

How this is calculated

Each card earns its rate up to its monthly cap, and the annual fee comes off. A capped card has a flat maximum: once you hit it, spending more earns nothing, so the effective rate falls continuously. An uncapped lower rate keeps earning. The crossover spend, where the two are equal, is the number that decides which card fits your spending, and it is not visible in either card's marketing.

a capped high rate beats an uncapped low one only below the crossover spend

s: Monthly spend
c: Cap

Worked examples

Each of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.

a capped card against an uncapped one

Monthly spend: ₹60,000
First card cashback rate: 5%
First card monthly cap: ₹1,000
First card annual fee: ₹2,500
Second card cashback rate: 1.5%
Second card monthly cap: ₹0
Second card annual fee: ₹500

Better cardThe second card is better

The 5% card caps at 1,000 a month; the 1.5% card earns 900 uncapped

Open this example

at low spend the capped card wins

Monthly spend: ₹15,000
First card cashback rate: 5%
First card monthly cap: ₹1,000
First card annual fee: ₹2,500
Second card cashback rate: 1.5%
Second card monthly cap: ₹0
Second card annual fee: ₹500

Better cardThe first card is better

boundary: below the cap the full 5% applies

Open this example

Method and limits

What it assumes

A single cap on total spend rather than per category.

What it deliberately does not model

Cashback is often excluded on rent, fuel, wallet loads and utilities, which can be much of a budget.
Real cards apply different rates to different categories.

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Frequently asked questions

Is five percent always better than one and a half?: Only below the cap. A five percent card capped at 1,000 a month stops at 12,000 a year, which an uncapped 1.5 percent card passes at a monthly spend of about 67,000.