Can Interest Outweigh Card Rewards?
Compare one purchase over time.
Estimated reading time: 1 minute
Interest on a card purchase can exceed its reward.
One fictional purchase
A fictional $1,000 U.S. consumer credit-card purchase earns a usable one-time 2% reward: $20. Assume 24% APR, no purchase grace period, a 365-day divisor and no payments or compounding during this simplified illustration. No fees or other transactions.
For 30 days, $1,000 × 0.24 ÷ 365 × 30 gives about $19.73 interest. Reward less interest is $0.27. For 45 days, interest is about $29.59, exceeding the reward by $9.59. Scenarios are separate. Round only final dollar results. This is not a profit calculation.
The CFPB explains that many issuers calculate interest daily. Actual terms and payments change results. Do not miss required payments.
Check your own numbers
Check redeemable rewards, interest, fees, grace-period eligibility and payment dates. Do not assume a reward pays your bill.
Medical Collections: Which Balance Counts?
Check the initial and current balances.
Welcome Bonus: Check the Payment Gap
Test a planned purchase before moving it.
Military Credit Monitoring: Three Requests
Track each bureau separately.