The Best Credit Card Rewards Calculator

There are so many articles about what the best rewards credit card is. They talk about all the features, pros and cons. Revolving categories. Redemption minimums. Cash back pretending to be miles. It’s really complicated.

You know what would actually answer this question once and for all? If we just calculated your expected rewards from each card and compared them. So, that’s what we’re going to do.


Credit Card Rewards Basics

Rewards are only rewards if you’re not paying interest. If you still have balances, pay them off before continuing. You should be paying off your balances every month for the rest of this to be relevant.

There are cashback rewards, there are miles at airlines or hotels, and then there are cashback points pretending to be miles. Here, we’re going to look at the first and the third types.

Length of credit history makes up 15% of the FICO credit score so you should have some cards which are open for a long time. Let’s see what are the best credit cards in the long run.


What’s the best cashback credit card to have forever?

You want the redemption rate to be the highest after the sign up bonus has already been obtained. This is the card that you will be spending most of your money on.

What you want to avoid is keeping a card with an expensive annual membership fee open for a long time. It’s not doing you much good.

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Citi DoubleCash is the best in this case and that’s great because it also doesn’t have an annual membership fee, so you can keep it open forever without paying for it each year. Also, unlike cards that can only be used to redeem for travel, DoubleCash can be redeemed for anything.

I calculated these numbers using the average New York household spending from before. This example household spends $25,143 a year on their credit cards.


What’s the deal with Sign Up Bonuses?

Notice how I said that permanent cards don’t take into account consider the sign up bonus. Here’s why:

The best credit cards in the long term are not the best in the short term, because sign up bonuses make up a large part of the value of rewards cards.

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Compare the first year reward values to second year reward values. The red arrow shows Citi DoubleCash. It’s no longer the at the top of the list because all the cards above it have some sort of signup bonus.

If you average the signup bonus over the years that you have the card open, here’s what you get.

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As time goes on, the cards separate into two groups, one around $500 a year and another around $375 a year.

Now, looking at just the top cards in the first year compared to Citi DoubleCash.

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Notice how these cards start very high due to the signup bonus and then fall below DoubleCash over time. You could stop using the card once you have the sign up bonus, but that generally means having to cancel the card because these signup up bonus cards tend to have annual fees. Cancelling cards affects the length of cards open and so has a small negative effect on your credit score.


I don’t spend 25k on my credit cards in a year. Does the math change?

Remember that these numbers were calculated off an annual household spending of 25k.

What happens if you spend less?

12k a year

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Citi DoubleCash is still the best card in the long run.

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But, in the first year, we see some other cards with signup bonuses overtake DoubleCash.

If you spend less than 12k a year, you may not spend enough to get the signup bonus (ex. Barclays Arrival and Capital One Venture requires 3K spent in three months).

What happens if you spend more?

50k a year

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In the long run, DoubleCash still comes out on top. Interestingly, at 95K annually, Barclays Arrival actually equals DoubleCash.

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In the short run, DoubleCash is actually doing better now as the weight of the signup bonus is reduced by the increase in spending.


What about airline cards, American Express membership points and hotel cards?

They’re very complicated because they can be redeemed for different values depending on how they are redeemed. Another subject for another time.


What’s the best cashback rewards card?

For most people spending more than 8k a year, Citi DoubleCash is the best. It gives you the most money without considering signup bonuses.

There are many good cards above with signup bonuses and you could chase them, but it may not be worth your time. You might as well find a card that will last you a lifetime.

Sounds like dating.