The rewards side
Cash back is simple: 2% of a $1,000 purchase is $20. If the statement is paid in full by the due date, most cards charge no interest on purchases thanks to the grace period, so the $20 is the whole story.
The interest side
Carry that $1,000 instead, and interest is charged every day at the daily periodic rate: the APR divided by 365 (some issuers use 360). At 22.15%, that's about 0.0607% a day. Compounded daily for 30 days, $1,000 builds up about $18.37 of interest. The simple shortcut, APR ÷ 12, gives about $18.46. Either way, one month of interest is almost the size of the cash back.
When interest wipes out the reward
$20 of cash back divided by $18.37 of monthly interest is about 1.09: a little over one month of carrying the balance erases the reward. Counted day by day, the break-even is about 33 days. After that, the card costs more in interest than it paid back. The chart shows the interest climbing month by month against the one-time cash back.
What this page assumes
A fixed balance with no payments, no new charges and no fees, and the same APR the whole time. Real statements use the average daily balance over the billing cycle, minimum payments shrink the balance a little, and carrying a balance can mean new purchases get charged interest too. Rewards terms and grace periods vary by card; your card agreement has the real rules. The 2% rate is illustrative, not a specific card.
Where the APR comes from
The default 22.15% is the Federal Reserve's G.19 average for credit card accounts assessed interest. Your own APR is on your statement.
Sources
Last reviewed: Oct 9, 2026