Cash Back Calculator

With our cash back calculator, we aim to help you assess the potential cash back from your purchase amount. To understand more about this topic, check out our discount calculator and double discount calculator.

This tool is designed to enhance your comprehension of:

• What cash back is;
• How to calculate your credit card cash back; and
• Its importance in maximizing your savings.

We will also include practical examples to help you understand the concept and process of calculating your cash back.

Cash back is defined as a reward offered by credit card companies and retailers as an incentive for you to make extra purchases. When you use a cash-back credit card or participate in a cash-back program, a percentage of the amount you spend is returned to you in the form of cash rewards. You can then spend these rewards on future purchases.

Cash back can be a good way to save money. Just imagine having a 2% cash back on a credit card. If you spend everything using that credit card, you are effectively spending 2% less on everything. As time goes by, it adds up.

However, most cash back programs have a cash back limit. This limits the maximum amount of cash back you can receive from the program. For example, some credit card programs will only give you cash back up to $50 a month.

Regardless, if you are able to utilize your cash back wisely, while controlling your spending habits, cash back can be a very effective tool in helping you to save more money.

To understand how to calculate the cash back, let's explore the following scenario:

• Amount purchased: $500
• Percentage cash back: 2%
• Cash back limit: $5 (if applicable)

1. Determine if your cash back program has a limit.

   The first step is to choose if your cash-back program has a limit.

   In this instance, we have a cash back limit of $5.

2. Identify the amount purchased.

   The next step is to identify the total amount you spent on purchases. In our example, we spent $500.

3. Compute the percentage cash back.

   Next, compute the percentage cash back of your cash back program. We have a 2% cash back percentage in this example.

   Please check out our percentage discount calculator to help you with this calculation.

4. Calculating the cash back.

   As our cash back program has a limit, we will calculate the cash back using the following formula:

   Cash back = min(Cash back limit, Amount purchased × Percentage cash back)

   Cash back = min($5, $500 × 2%) = min($5, $10) = $5

   Thus, you would earn $5 in cash back for this purchase due to the limit.

   Just for your information, if your cash back program has no limit, you will be using this formula instead:

   Cash back = Amount purchased × Percentage cash back.

Now that you understand the cash back calculation and its concept, let's explore how you can use it to save more money:

• Immediate financial benefits

  What's better than getting a discount right after your purchase? Cash back works almost exactly like that. This way, you are effectively spending less and saving more.

• Accumulates over time

  Although the cash back rewards amount might seem insignificant, it can adds up after a certain amount of time. Imagine saving 2% of your purchase for 20 years.

• Enhances financial discipline

  In order to maximise your cash back, you will inevitably start to pay more attention to your finances. This can helps you to nurture a better financial discipline.