If you spend $1,500 a month on a 2% cash back card, you earn about $30.00 a month. Carrying a balance of just $1,500 at 24.99% costs $31.24 a month in interest, which is more than the rewards. A card is only a good deal if you pay it off.
Rewards vs interest
| Balance carried | Monthly interest at 24.99% | Monthly cash back at 2% on $1,500 |
|---|---|---|
| $750 | $15.62 | $30.00 |
| $1,500 | $31.24 | $30.00 |
| $3,000 | $62.48 | $30.00 |
| $4,500 | $93.71 | $30.00 |
The break-even balance is the cash back divided by the monthly rate: $30.00 ÷ 2.08% = $1,441. Carry more than that and the card costs you money.
What we assumed
- $1,500 spent a month, 2% rewards, 24.99% APR, interest on the carried balance only.
Related calculators: Credit Card Payoff Calculator, Personal Loan Calculator.
Questions people ask
Is there a rewards card for people who carry a balance?
Low-APR cards exist, but they tend to have lower or no rewards. Compare total cost, not the headline rewards rate.
Estimates for general education, not financial, tax or legal advice. Real results depend on your lender, employer, tax situation and location. See the disclaimer.