Rewards vs. interest
Cashback, points, and miles are real value, but only if interest and fees don’t erase them.
Earning 1.5% back while carrying a 24% APR balance means you’re paying far more than you earn.
Rewards are profit only when you pay in full and skip the fees.
Common questions
Are credit card rewards worth it if I carry a balance?
Almost never. Earning 1.5% cashback while paying a 24% APR means the interest costs roughly sixteen times what the rewards return. Rewards are calculated once on what you spend; interest compounds on what you owe. Clearing the balance beats optimizing the rewards rate every time.
When is an annual fee card worth paying for?
When the rewards and benefits you will actually use exceed the fee, and you pay in full each cycle. Divide the fee by your rewards rate to find the spend you need to break even - a $95 fee at 2% back needs about $4,750 of annual spend before it pays for itself.
How much interest cancels out my cashback?
A single month of carried balance usually erases a year of rewards on that spend. At 1.5% back and a 24% APR, roughly one month of interest costs more than the cashback earned on the same amount. CardLab shows the exact crossover point using your own APR and balance.