Online Calculators > Financial Calculators > Cash Back Calculator

# Cash Back Calculator

Cash Back Calculator to calculate the cash back reward from using your credit card. Simply enter the cash back percentage and the purchase amount, and the credit card cash back calculator will calculate the reward amount.

## Credit Card Cash Back Calculator

Cash Back Limit:
Cash Back Limit: \$
Percentage Cash Back: %
Purchase Amount: \$
 Cash Back Amount: \$1.00

## What is cash back?

Cashback is a type of credit card and debit card reward that give cardholders a small percentage of the amount they spend. The reward is the actual cash that cardholders can use. They can use the cash back to pay off their bills, deposit them in their bank accounts, or buy things.

In other words, the cash back from your credit card credit card company is real cash that you can use. The more money you spend on a credit card, the more cash you receive back. But keep in mind this is not free money, the cash back is only a small amount compared to how much you need to spend.

## How do cash back credit cards work?

A cash back credit card works just like a regular credit card. The only difference is that Instead of rewarding points, a cash back credit card rewards cash.

Traditional credit card reward points where cardholders can only use these points to redeem products or services offered by the card issuer.

On the other hand, there are no restrictions on how a cashback credit cardholder uses their cashback.

They can use the cashback to buy whatever they want to, pay off their next credit card bill, or deposit to their banks.

Cash back is a way that credit card companies use to lure in customers. Many credit card companies run promotions where you get more cash back on certain things, during a specific time frame, or after you spend a preset amount of money after opening a new credit card.

## How to calculate cash back?

To learn how to calculate cash back, you will need to know what percent you are getting from using your credit card. The cash back formula given below is used to calculate the amount of cash back.

C = A X P, where
C = Cash back reward
A = Amount spent
P = Cash back percent.

## Cash back example

Let's take a look at a real-life example of how to calculate how much cash back you will be getting from spending.  If your credit card pays 2% on cash back and you spend \$250, you will get \$5 cash back.

Using the cash back formula above, we have

C = A X P Cash Back Reward = 250 * 0.02 = \$5.

## What is a cash back limit?

Most credit cards do not have an overall cash back limit, but they may have a limit on cash back for certain categories, often on their high-tier cash back.

For example, if you are getting a 1% cash back for all your purchases, but a 3% cashback on gas with a limit of \$1,000 each year. That means you can get a maximum of \$1,000 cash back on your gas spending each year. After you exceed \$1,000 in cash back, your gas cashback will be reduced to 1% since you have 1% cash back for all purchases.

## How to use the credit card cash back calculator?

Our credit card cash back calculator calculates your cash back rewards based on the cash back percentage and the amount you spend.

The cash back calculator also takes into account the cash back limit. If there is a limit to how much reward you can earn from your credit card, select the Cash Back Limit to "Yes" and enter the cash amount limit.

## Cash back amounts

The cashback amounts are usually from 1% to 5% of the total spending depending on the card issuer and the type of credit card that you have.

Cash back is a strategy that card issuers use to attract new customers and encourage existing customers to make more purchases with their credit cards.

## Things to watch out

For people who are responsible for their finances and pay off their credit cards, cashback is a better way to save money than using cash. However, many people get into trouble by overspending on their credit cards.

When you overspend, and can't pay off the credit card, you end up paying high interest on the balance. The interest payment will far exceed the small cashback amount you save as all credit cards have high APR and interest costs.

Credit card debt can have a snowball effect and some people never get out of debt. Therefore, one should only use the money that one can afford to pay off. Use a cash-back credit card with caution if one has an overspending habit.

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