Cash back and points can take a little off your holiday shopping, but the math only works if you pay the card in full. This guide shows how to work out what rewards are really worth, when interest wipes them out, and what the Consumer Financial Protection Bureau (CFPB) found goes wrong with rewards programs. It does not recommend any card. Facts checked November 11, 2026.
The basic math
- Cash back: reward = spending × the cash back rate. $1,000 of holiday spending at 1.5% back earns $15.
- Points or miles: reward = points × what one point is worth when you redeem it. The value can differ by how you redeem: a statement credit, a gift card or travel may each give a different value per point.
- Annual fee: subtract it from what you earn in a year. A $95 fee needs $6,334 of spending at 1.5% just to break even ($95 ÷ 0.015).
When interest cancels the reward
If you carry a balance, interest usually costs more than the reward. $1,000 at a 22% APR costs about $18.33 in interest for one month ($1,000 × 22% ÷ 12), more than the $15 earned. Two months cost more than twice the reward. Compare paying with rewards and paying off over time with our cash back or low interest calculator and the credit card payoff calculator.
Watch for "store card" promotions
A checkout offer of "no interest if paid in full" is often deferred interest: if any balance is left when the promotion ends, interest from the purchase date can be charged. See the deferred interest calculator.
What can go wrong with rewards (CFPB)
In a May 2024 Issue Spotlight, the CFPB analyzed several hundred consumer complaints about credit card rewards and found four recurring problems that kept people from getting the rewards they were promised (CFPB: Credit Card Rewards):
- Unexpected promotional conditions: bonus offers with conditions people did not expect.
- Devaluation: points becoming worth less after they were earned.
- Redemption problems: trouble using rewards.
- Revocation: rewards taken away, for example when an account is closed.
Simple habits for the season
- Set your holiday total first in the holiday budget planner, and do not buy more to earn rewards.
- Read the rewards terms: caps, categories that rotate, expiration and how points are valued.
- Redeem rewards you have earned instead of letting them sit, since programs can change.
- Pay the statement balance in full by the due date if you can.
Frequently asked questions
How much cash back do I get on holiday shopping?
Multiply what you spend by your card's cash back rate. $1,000 at 1.5% is $15, before any annual fee.
Are rewards worth it if I carry a balance?
Usually not. At a 22% APR, one month of interest on $1,000 is about $18.33, which is more than $15 of cash back.
How much is a credit card point worth?
It depends on the program and how you redeem it. Check the value per point for each redemption option in your card's rewards terms.
Can my rewards be taken away or lose value?
The CFPB found complaints about devaluation and revocation of rewards. Read the program terms and redeem rewards you have earned.
Does this page recommend a card?
No. It explains the math and official findings only; compare cards using their own terms.