What This Calculator Does
Premium rewards credit cards often charge an annual fee in exchange for a higher earning rate or perks. This calculator tells you the break-even spend — the amount you need to charge each year for the rewards to cancel out the fee — and your net annual value, the money you actually come out ahead by once the fee is paid. It works for any currency; just enter consistent amounts.
How to Use It
Enter the card's annual fee, the effective reward rate (as a percentage of spending, e.g. 2 for 2% cash back), and your expected annual spend on the card. The tool returns the break-even spend, the total rewards you'd earn at your spend level, and your net value after the fee. A positive net value means the card pays for itself; a negative value means a no-fee card would serve you better.
The Formula Explained
Break-even spend divides the annual fee by the reward rate: at 2% rewards, a $95 fee requires \(\$95 / 0.02 = \$4{,}750\) of spending to break even. Net value multiplies your annual spend by the reward rate and subtracts the fee. If you earn rewards at multiple rates, use a blended effective rate that reflects your real spending mix.
$$\text{Net Value} = \text{Annual Spend} \times \frac{\text{Reward Rate (\%)}}{100} - \text{Annual Fee}$$
$$\text{Break-Even Spend} = \dfrac{\text{Annual Fee}}{\dfrac{\text{Reward Rate (\%)}}{100}}$$
Worked Example
Suppose a card has a $95 annual fee, earns 2% rewards, and you spend $12,000 a year. Break-even spend = \(95 / 0.02 = \$4{,}750\). Rewards earned = \(12{,}000 \times 0.02 = \$240\). Net value = \(240 - 95 =\) $145. Since $12,000 is well above the $4,750 break-even point, the card is worth it.
$$\text{Net Value} = 12{,}000 \times \frac{2}{100} - 95 = 145$$
FAQ
What reward rate should I enter? Use your blended effective rate across all categories, not just the headline bonus rate.
Does this include sign-up bonuses or perks? No — it's purely fee vs. ongoing rewards. Add perk values separately if you want a fuller picture.
What if my reward rate is 0? Break-even isn't defined (you can never offset the fee with rewards), so the tool shows $0 for break-even.
