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 $800.00 a year. The first nets $9,500.00 and the second $10,300.00. Above about 55555.56 a month the uncapped card wins, because the capped one stops earning.

First card, net of fee

$9,500.00

Second card, net of fee

$10,300.00

Annual difference

$800.00

First card effective rate

1.32%

Second card effective rate

1.43%

Monthly spend where they tie

$55,555.56

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

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.