Not all credit card rewards are created equal. Points or percentage cash back earned can vary from card to card depending on each loyalty program's rules. But a few mathematical shortcuts make it easy to calculate and compare reward rates. Calculating cashback credit card rewards Cashback credit cards that pay a percentage of each purchase back to you are the easiest reward rates to calculate. To convert a 1.5%, 3%, or 5% cashback rate into dollar terms, divide the cashback percentage number by 100. For example, a card that pays 1.5% cash back on all qualifying purchases has a rewards rate of $0.015 (1.5 divided by 1000) per $1 spent. A card offering 3% cash back pays you $0.03 for each dollar you spend; 5% nets you $0.05, and so on. The above math works for a card that offers the same rewards rate for all purchases. But there are other reward structures that aren’t as straightforward and require a bit of reverse engineering to calculate. Here’s how to calculate the rewards rate per $1 spent on cards with different bonus tiers or caps on how much you can earn: Divide the total amount you earned in rewards by the amount you spent to earn it. Rewards rate example of a card with bonus spending categories: Let’s say you use a card that offers elevated cashback rates on travel (3%) and gas (2%) and 1.5% on everything else. During the month you spend $400 on a plane ticket (earning $12 in rewards), $100 on gas ($2) and $500 on other stuff ($7.50). Your total rewards rate — $21.50 divided by the $1,000 you spent — is $0.0215 per dollar. Multiply that by 100 and you’ve got your cashback rewards rate percentage: 2.15%. Rewards rate example of a card with spending caps: YYou spend $1,000 treating your staff to a celebratory dinner at a local fine dining establishment. You use a rewards card that offers 5% cash back on restaurant spending up to $500 a quarter, and 1% cash back on amounts above that. Your total rewards payout is $30 — $25 for the portion of your tab that qualified for the 5% bonus rate and $5 cash back for the amount that exceeded the spending cap. Your total rewards rate comes to 3% ($30 divided by $1,000 = $0.03 back per $1 spent.). Calculating points-based credit card rewards To figure out the reward rate on a credit card that rewards you points on your spending, you need to know 1) how many points you get per $1 spent and 2) the cost of the item your points can buy. Here’s the math: divide the value of the reward (what it would cost to purchase the item outright) by the number of points required to redeem it to calculate the point value. Rewards rate example for credit card points: If you earn 1 point for every dollar you spend, and it takes 50,000 points to cover a $500 plane ticket, each point is worth one cent, which equals a 1% rewards rate. Calculating the rewards rate on a points-based credit card gets tricky quickly depending on a card’s setup and your redemption options. Cards may award the same number of points on all purchases (e.g., one point for each $1 spent), or have a category-based points system (e.g., four points for each dollar spent at hotels, three points for airfare, two for gas, etc.). Check your rewards card agreement for details. Similarly, points can be worth different amounts based on what you redeem them for. The goal is to redeem points for the highest-value reward, which may require putting in some elbow grease to manage your options. But if points math makes your head spin, a straight-up cashback credit card is a straightforward — and still highly rewarding — option to consider.