Cashback Percentage Calculator
Written by the percentages.co.uk team. Reviewed for accuracy.
This calculator works out how much cashback you earn from a purchase and what your effective price is after the cashback is applied. Enter your purchase amount and cashback rate, and optionally your monthly spend, to see annual cashback estimates.
How it works
Cashback is a reward given as a percentage of the amount spent. Popular cashback credit cards, sites like TopCashback and Quidco, and bank accounts that offer cashback all use the same basic calculation: multiply the spend by the cashback rate.
The formula
Cashback earned = Purchase amount × (Rate / 100)
Effective price = Purchase amount - Cashback earned
Annual estimate = Monthly spend × (Rate / 100) × 12
Why this works: Cashback is simply a percentage discount paid after the purchase rather than at the point of sale. The effective price shows you the real cost once the reward is factored in, making it easy to compare cashback deals with upfront discounts.
Worked examples
You spend £1,200 on a laptop using a credit card offering 1% cashback. How much do you earn?
- Cashback: 1,200 × (1 / 100) = £12
- Effective price: 1,200 - 12 = £1,188
Answer: £12 cashback, effective price £1,188
A TopCashback deal offers 8% on a £340 broadband contract. How much cashback is that?
- Cashback: 340 × (8 / 100) = £27.20
- Effective price: 340 - 27.20 = £312.80
Answer: £27.20 cashback, effective price £312.80
You spend £2,000 per month on a 0.5% cashback current account. What is the annual cashback?
- Monthly cashback: 2,000 × 0.005 = £10
- Annual cashback: 10 × 12 = £120
Answer: £120 per year
A cashback site offers 3.5% on a £600 holiday booking. How much cashback will you receive?
- Cashback: 600 × (3.5 / 100) = £21
- Effective price: 600 - 21 = £579
Answer: £21 cashback, effective price £579
An American Express card offers 5% cashback on supermarket spend for the first 3 months. You spend £800. What do you earn?
- Cashback: 800 × (5 / 100) = £40
- Effective price: 800 - 40 = £760
Answer: £40 cashback, effective price £760
When to use this
- Comparing cashback credit cards: Working out whether a 1% card with no annual fee or a 2% card with a £25 annual fee is better value at your typical monthly spend level.
- Using cashback sites: Checking whether it is worth going via a cashback site (earning 4%) versus buying directly with a 1% cashback card.
- Large purchases: Calculating the cashback reward on a major purchase like a car insurance policy, holiday or appliance before deciding where to buy.
- Annual review of rewards accounts: Totalling up how much cashback you have actually earned to check whether your card or account is genuinely worthwhile.
Understanding the result
Cashback is only valuable if you would have made the purchase anyway. Spending more than you normally would just to earn cashback costs more than it saves. The effective price comparison is only meaningful when comparing two routes to the same purchase.
Some cashback sites have minimum withdrawal thresholds, pending periods or annual caps. Factor these in when comparing offers. The calculated amount assumes the full rate applies to the entire purchase.
Related concepts
➡ Cashback works like a discount applied after purchase. To find the price after a percentage discount is applied upfront, use the percentage off calculator to calculate sale prices instantly. ➡ To understand what percentage of your income a regular cashback reward represents, use the percent of income calculator to put the reward in context. ➡ To compare the total value of two cashback offers over a year, use the percentage change calculator to find the relative difference between two rates.
How to do this in Excel
=A1*(B1/100)
Put purchase amount in A1 and cashback rate in B1. For effective price: =A1-(A1*(B1/100)). For annual estimate from monthly spend: =A1*(B1/100)*12.
How to do this without a calculator
Multiply the purchase amount by the cashback rate and divide by 100. For 1% on £500: 500 × 1 ÷ 100 = £5. For 2% on £300: 300 × 2 ÷ 100 = £6. For quick mental maths, 1% of any amount is just moving the decimal point two places left.
Common mistakes
Ignoring annual card fees when comparing cashback cards
A 2% cashback card with a £50 annual fee is only better than a free 1% card if you spend more than £5,000 per year on the card. Use the annual estimate to check the break-even point.
Treating cashback as a reason to spend more
Cashback rewards are worthwhile on spending you were already going to make. Spending an extra £100 to earn £1 back at 1% is a net loss of £99.
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