Credit Cards

The two cent rule of credit cards: If you’re not earning more than 2% back, you’re doing it wrong.

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“Plane” and simple if your credit card isn’t yielding at least a 2% return on all of your spend…it’s time to get another credit card. Why? Because there are simple, straight-forward, cashback credit cards that yield 2% back on your purchases, and thus, that’s your opportunity cost if you choose to use anything else. Most people don’t understand this, and ultimately leave a lot of money on the table.

If you’re using a card that earns points or miles, those points or miles need to net you more than 2% otherwise, you’d be better off going cashback.

Here are a few cashback credit cards that earn 2% back

  • Personal
    • Citi Double Cash® Credit Card
      • 2% back on all purchases without a cap
      • No annual fee
    • Wells Fargo Active Cash
      • 2% back on all purchases without a cap
      • No annual fee
    • Bank of America Premium Rewards
      • 1.5% back on all purchases; however, if you have over $100k in BofA deposits ( including retirement ) you get 2.625% back on all purchases.
  • Business
    • Capital One Spark Cash Plus
      • Unlimited 2% back on all purchases
      • $150 annual fee – so this actually is a  bit under 2% because you have to account for the fee.
    • American Express Blue Business Plus
      • 2x Membership Rewards on all purchases up to $50k, 1x on purchases thereafter
    • American Express Blue Business Cash
      • 2% cashback on all purchases up to $50k, 1x on purchases thereafter

How you should calculate the return you’re getting with your credit card.

The amount that you’re getting back on you credit card is a little harder to calculate since points all have different values and credit cards now come with a lot of benefits that everyone values differently. But… here’s some questions you need to answer in order to properly value your credit card.

The Simple Method:

This doesn’t take into account any of the fringe benefits you’re getting on the card, or whether you get certain credits that help you offset the fee.

  • How many points did I earn in a year?
  • What did I spend to earn those points?
  • What was my annual fee?

(( Total points x Value of Points ) – Annual Fee) 

 Total amount of money I spent

The more Complex Method that includes credits and benefits

  • How many points did I earn in a year?
  • What did I spend to earn those points?
  • What was my annual fee?
  • What benefits did I use?
    • Car Rental Insurance, Lounge Access,
  • What credits did I use?
    • Hotel credit, Travel Credit, Airline Credit, Dell, Uber, etc
  • Did I get any free nights, elite miles, etc
    • Does the card come with a free night? Did you spend enough to get a free night?

Everyone is going to value the above differently. Some will value a $200 Amex Fine Hotels and Resort credit as $200, others will say it’s only worth $100 to them. This is up to you.

I then use this formula

(( Total points x Value of Points ) + Value of benefits Used + Value of Credits + Value of Nights – Annual Fee) 

 Total amount of money I spent


What are my points worth?

Everyone values their points differently, and there is a litany of explanations on how they arrived at a specific valuation. I tend to think of these factors:

  • All bank points that transfer are worth a minimum of 1.5 cents; however, Wells Fargo primarily transfers to partners whose own points can be purchased aroudn 1.5 cents. Amex, Bilt, and Chase are hands down the best points and I’ve valued them on par with one another ( you could wiggle this ), and Citi and Capital One are worth a bit less since they don’t have as many domestic transfer partners.
  • Hotel and Airline points can almost always be purchased… most of my valuations are based off the lowest price they’ve been sold, or aside from Covid fire sales, the lowest price per point they’ve been sold.

Since I value things differently than other sites, I am showing you 4 other sites valuations and then using an average.

Clearly you can see from the chart, universally the best points are transferrable bank points which hover around the 1.5 to 2 cent mark.

How many points did I earn?

Most card issuers will give you a card breakdown of how many points you’ve earned in a year. Let’s take a look at a card of mine. You could also go back a year in statements and see what your balance was and compare it to what your balance is now and calculate it that way.

a screen shot of a computer

What did I get back on my purchases? My Cents Per Point…CPP

Since July 2023, my Chase Ink Business Preferred has earned just over 68k Ultimate Rewards; however, only 28,177 were earned from purchases, so that’s what we will use. I spent $16,031 over the past 10 months. I could prorate the annual fee, but let’s just say I spent that in a year to make that math a bit easier.

I’m going to use $0.0208 ( you can see how I got that valuation down below ).

( Total points x Value of Points ) + Value of benefits Used + Value of Credits + Value of Nights – Annual Fee  /   Total amount of money I spent = CPP

( 28,177 x $0.0208 ) + $0 + $0 + $0 – $95 / $16,031 = CPP


$491.08/$16,031 = $.0306

I’d likely get even more value than this because I usually extract more than 2.08 cents out of Chase Ultimate Rewards, but this is how I go about thinking about it. Clearly I’ve outdone the 2 cent hurdle of cashback.

Why putting spend on Airline and Hotel credit cards can lower your Cents Per Point

Delta’s CEO bragged that nearly 1% of the US GDP was processed on Delta cobranded credit cards. This is rooted in a misunderstanding of the value of points and miles, and doesn’t mean you shouldn’t have airline and hotel credit cards, but rather that the value of them is held in the benefits and credits, not the points that you’re earning.

The main caveat I’d make to that statement is that often using an airline or hotel credit card with the brand can make sense value wise because they usually have a bonus attached to brand spend. For instance, a Hilton Aspire earns 14x at Hilton properties. I value Hilton Honors at 1/2 a penny a piece, but that’s still 7 cents back on every dollar you spend if you use that card. Even the Chase Ink Business Preferred® or Chase Sapphire Reserve® 3x spend on travel doesn’t hit that ( though you may prefer the flexibility of those points compared to locking in Hilton Honors )…I’m just making the point that they can provide competitive value at the brand.

Example: Delta SkyMiles® Gold American Express Card

Let’s say you have this credit card and spend $20k on it per year and earn 22,000 points. The card earns at the following rate, so a small fraction of your purchases had a category bonus attached. You also took 5 or 10 Delta flights where you took advantage of Main Cabin 1 boarding and the first checked bag free benefit….that’s worth $350. Let’s say you also booked a hotel through Delta Hotels and made use of your $100 credit as well.

The earn rate for the card is:

  • Earn 2X Miles on Delta purchases, at U.S. Supermarkets and at restaurants worldwide, including takeout and delivery in the U.S.
    • Earn 1X Miles on all other eligible purchases

Calculating your CPP with spend and 5 flights:

  • Total Points earned in a year: 22,000
  • Total spend: $20,000
  • Average Value of Delta SkyMiles from chart: $0.0116
  • Annual Fee: $150
  • Benefits:
    • 5 first checked bags – $150
    • 5 flights with Main Cabin 1 boarding…$25
  • Credits:
    • Value of $100 Delta Hotel Stay Credit: $100

22,000 x $0.0116 = $255.6 + $150 + $25 + $100 – $150 = $380.6

Divide that by $20k = $0.0193 ( You’re below the 2 cent threshold )

Calculating your CPP with spend and 10 flights:

  • Total Points earned in a year: 22,000
  • Total spend: $20,000
  • Average Value of Delta SkyMiles from chart: $0.0116
  • Annual Fee: $150
  • Benefits:
    • 10 first checked bags – $300
    • 10 flights with Main Cabin 1 boarding…$50
  • Credits:
    • Value of $100 Delta Hotel Stay Credit: $100

22,000 x $0.0116 = $255.6 + $300 + $50 + $100 – $150 = $555.20

Divide that by $20k = $0.02776

You can see that you’d need more than 5 flights to break the 2 cent mark; however, almost all of that is derived from the benefits and credits because as a cardholder you fly Delta a lot. The points you’ve earned are actually worth $255.6 on $10k spend… just $0.0116, and the rest of the credits and benefits are yours without spending a dime.

If instead you just put that spend on an American Express Everyday Preferred at 1x you’d earn the following:

The CPP holding the Delta Gold but Spend on Amex Everyday

  • Total Points earned in a year: 20,000 Amex Membership Rewards
  • Total spend: $20k
  • Average Value of Amex Points from chart: $0.02
  • Annual Fee: $150 ( Delta Card ) + $95 Amex Every Day Preferred
  • Benefits:
    • 5/10 first checked bags =  $150/$300
    • 5/10 flights with Main Cabin 1 boarding = $25/50
  • Credits:
    • Value of $100 Delta Hotel Stay Credit: $100

5 flights

20k ( $0.194) + $150 +$25 + $100 – $150 – $95 = $423

Divide that by $20k = $0.02115

10 flights:

20k ( $0.194) + $300 +$50 + $100 – $150 – $95 = $593

Divide that by $20k = $0.02965

You’ve increased your rate of return in either scenario and now have 20k Amex points which can be transferred into 20 different partners including Delta. This is also assuming that you don’t earn any category bonus points which would add more Amex points to your balance.


If you utilize this formula and the card you’re using is netting you less than a 2% return on your purchases, at the very least, I’d consider pivoting your spend to a card that earns transferrable points from Amex, Bilt, Chase, Capital One, Citi, or Wells Fargo – these points are all quite valuable.

Personally, if a card has an annual fee over $95, I look at the value of the credits and benefits of a card to erase the annual fee and then some. That way, I know I’m already net ahead, and the 2% hurdle is solely coming from the cumulative points I earn across categories, and nearly all my spend is put on cards that earn transferrable points, and my blended average number of points per dollar is 2x.


Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

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Affiliate LInk

Chase Sapphire Preferred® Card

The Chase Sapphire Preferred® is a great starter card that earns Premium Ultimate Rewards that can be transferred into over a dozen partners many of which are US based including Hyatt, Southwest, United, IHG, and Marriott.

Welcome Offer

Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. 

Annual Fee


Points Earned

Transferrable Chase Ultimate Rewards

  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.
    • That’s $750 when you redeem through Chase Travel℠
  • 5x on all travel purchased through Chase Travel℠
  • 3x on dining, including eligible delivery services for takeout & dining out
  • 3x on select streaming services
  • 3x on online grocery purchases
    • (excluding Target, Walmart and wholesale clubs)
  • $50 Annual Chase Travel Hotel Credit via Chase Travel℠
    • The begins immediately for new cardmembers and after your account anniversary for existing cardmembers
  • 2x on all other travel
  • 10% Anniversary Bonus
    • Every year you keep the card, your total spend will yield a 10% points bonus. If you spend $10k in a year, you’ll get 1k bonus points
  • Chase Sapphire Preferred continues to redeem at 1.25c in the Chase Travel℠ and the slew of other benefits remain in tact including Auto Rental Collision Damage Waiver ( primary ), purchase protections, etc.
  • Points are transferrable to 14 Ultimate Rewards partners
  • Redeem in Chase Travel℠ for 1.25 cents per point
  • No foreign transaction fees
  • Suite of Travel and Purchase Coverage
    • Auto Rental Collision Damage Waiver is my favorite
  • Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2024
  • $95 Annual Fee

We keep an up to date spreadsheet that lists the best ever offers: You can find that spreadsheet here.

Historically 80k is a very, very good offer and hit in both 2022 and 2023. In 2021, we saw the offer hit an all time high of 100k. Who knows if that will ever come back.

Main Cast: 

Cards that earn flexible points and should be used on the bulk of your purchases.

Supporting Cast:

Cards that earn fixed points in the currency of the airline/hotel and can not be transferred at attractive rates. These cards yield benefits that make it worth keeping, but not necessarily worth putting a lot of your everyday spend on. 

The Chase Sapphire Preferred® is exceptional starter card and offers transferrable Ultimate Rewards, and pairs well with other Chase cards.

If you carry this card alongside Chase’s cashback cards like the Chase Freedom Flex®  and Chase Freedom Unlimited® or the business versions: Ink Business Cash® , Ink Business Unlimited® you can combine the points into Preferred account and transfer into hotel and airline partners

Annual fee is quite low at $95 a year + you get a 10% anniversary bonus on points + $50 hotel credit in Chase travel.

The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.


  • Christian May 1, 2024

    You make a valid argument but I do think it’s a little more nuanced than you state. As an example I’m a Hyatt Globalist who stays around 40 nights a year at Hyatt hotels but get the other 20 or so nights to maintain my status through business spend on my Hyatt card. Technically I’m losing out through your calculations but between free parking, suite upgrades, club lounge access, free breakfast, etc. I think I’m getting more than the $500-$1,000 I would get by using a 2X card. I’m in a similar situation with American where I need their miles so I spend on their cards and get EXP status as an ancillary result.

  • Christian May 1, 2024

    200K signup bonus currently! $4k value using the $.02 value rule!

    Good luck!

  • flyAXA May 1, 2024

    Which Bank of America Premium Rewards card gets 3.5% cashback on all purchases? I thought at the platinum level it was 3.5% on travel and dining and 2.62% on all other.

    • Miles May 1, 2024

      Hey, fat finger mistake, thanks for the alert! Updated!

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