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How to Calculate Cash Back on a Credit Card?

5 min read
Published January 22, 2025
Credit card rewards

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Key Takeaways

  1. You can use a credit card cash back calculator to determine the cash back rewards you may receive on a transaction or use a simple calculation.

  2. To calculate cash back, you need to know the card’s cash back rate and the purchase cost.

  3. Some credit cards have different reward rates in different categories, which may rotate.

A cash back credit card is a type of rewards card that gives you a percentage of your eligible spending back as cash, which you could redeem as a statement credit, donation, or bank deposit. With certain cards, you may earn cash back on everything from a new dining room table to a flight across the country. You can use a cash back reward calculator or a simple math formula to calculate your cash back. Let’s break it down into steps.

Determine the cash back rate for your purchase

You’ll need to know the reward rate on a transaction to determine how much cash back you may receive. You usually can find your card’s cash back rates on your credit card issuer’s website, credit card statement, or the paperwork you received with your credit card.

A cash back card may offer a flat-rate or tiered rewards. With a flat-rate cash back rewards credit card, you may earn the same percentage across all purchases. For example, you might earn 2% cash back every time you use your card; however, exclusions may apply.

On the other hand, tiered rewards cards offer higher rates on certain types of purchases or purchases from specific stores. For example, the Discover it® Chrome Card allows you to earn 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter, automatically. You'll still earn unlimited 1% cash back on all other purchases.1 So, the rewards rate for dinner at your favorite restaurant would be 2%.

Some credit cards, like the Discover it® Cash Back Card, have bonus reward categories that rotate throughout the year. When calculating cash back on a rotating rewards card, it’s important to confirm which categories currently have a bonus cash back rate.

Learn More

With the Discover it® Cash Back Card, you can earn 5% cash back on everyday purchases at different places each quarter, up to the quarterly maximum when you activate. Plus, earn 1% cash back on all other purchases.  Refer to the Discover Cashback Bonus® Calendar for up-to-date bonus categories.

Next, determine the purchase amount

Your cash back amount is a percentage of your purchase costs. So, you have to know how much you spend in order to calculate the cash back you’ll receive in return.

For example, maybe you recently bought a dishwasher from a store with a Discover itÒ Cash Back Card and would like to know how much cash you can expect back. You might check your receipt to determine the cost. If you can’t find the receipt, don’t worry–the transaction should appear on your credit card account statement and your card’s mobile banking app. For this example, we’ll say the dishwasher cost $650. That’s the amount you’ll use to calculate your cash back. 

Or maybe you don’t have a rewards credit card yet, and you’d like to determine how much cash back you could earn with a particular card. In that case, you might look at your expenses in one of the card’s bonus categories.

Say, for example, you have a long commute to work each morning. You may want to see how much cash back you might earn on fuel costs each month if you switch to the Chrome Card. Start by checking the amount allotted to gas on your monthly budget or review your bank statements. For this example, if you spend on average $230 on gas each month, you can use that number to estimate your potential cash back.

Finally, calculate the cash back you can earn

Once you know your cash back rate and purchase amount, calculating your cash back is simple.

 

First, convert the cash back rate to a decimal. You can do this by moving the decimal point back two spaces or by dividing the percentage amount by 100. So, 5% becomes .05.

 

Next, multiply that decimal by your purchase amount.

 

Here’s how you’d find the cash back amount for the dishwasher with a Discover it® Cash Back card if the store was part of the 5% promotional offer:

 

.05 x 650 = 32.5

You would earn $32.50 in cash back for the dishwasher.

 

Using the same formula, you can estimate how much cash back you might earn for gas with the Chrome Card.

 

.02 x 230 = 4.6

 

So, you’d earn $4.60 in cash back for gas.

 

You can use the same formula to determine your rewards on most purchases with cash back credit cards.

Did you know?

Some credit card companies have offers for new cardmembers that can take your cash back rewards even further. With Cashback Match from Discover, you can get an unlimited dollar-for-dollar match of all the cash back you earn at the end of your first year.2

See if you’re pre-approved

Cash back doesn’t have to be mysterious. You can use a simple calculation or a cash back calculator to determine the rewards you may receive for a significant purchase. You could also use these tools to compare your earning potential with multiple cash back credit card options.

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  1. 2% Cash Back at gas and restaurants: You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station, and some public electric vehicle charging stations. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Even if a purchase appears to fit in a 2% category, the merchant may not have a merchant category code (MCC) in that category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not earn 2% if the technology does not provide sufficient transaction details or a qualifying MCC. Learn more at Discover.com/digitalwallets. See Cashback Bonus Program Terms and Conditions for more information.

  2. Cashback Match: We’ll match all the cash back you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You earn cash back only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.