How to use this calculator
- Transaction / Bill Amount: the amount you owe before any fees.
- Method A, Bank / ACH: the flat fee for paying by bank transfer or e-check. Enter 0 if it's free.
- Method B, Credit Card: the percentage the biller charges for card payments, any extra flat fee per transaction, and the cashback rate your card earns.
The calculator shows the net cost of each method, which one is cheaper and by how much, and the break-even amount where the two cost the same.
Worked example
Using the default inputs: a $1,000 bill, a $1.00 bank transfer fee, and a card fee of 2.9% + $0.30 with a 2% cashback card.
- Paying by card charges $1,029.30 in total, a $29.30 fee.
- 2% cashback on the full $1,029.30 earns $20.59.
- Net cost of the card: $29.30 − $20.59 = $8.71, compared with $1.00 by bank. The bank transfer is cheaper by $7.71.
The break-even amount is $83.85. For bills below that, the card is cheaper, because the bank's flat $1 fee is a bigger share of a small bill. A $50 bill costs only $0.72 net by card.
The break-even math
Many billers, such as tax agencies, utilities, schools and some landlords, add a fee when you pay by credit card instead of bank transfer. If your card earns cashback or points, that fee can be partly or fully offset. The question is whether your rewards are worth more than the extra fee.
Card net cost = (A × p + f) - (A + A × p + f) × c
Break-even A = (bank fee - f + f × c) / (p - c - p × c)
Here A is the bill amount, p the card fee percentage, f the card's flat fee, and c your cashback rate. The rewards are calculated on the total amount charged to your card, including the fee, because most cards earn rewards on everything you charge.
Flat fees vs. percentage fees
A bank transfer usually has a small flat fee (for example, $1.00), while a card fee scales with the bill (for example, 2.9% + $0.30). Because one is fixed and the other grows, there is always a specific amount where they cross:
- Small bills: a $1.00 fee on a $10 payment is a 10% penalty, so a 2.9% card fee is much cheaper.
- Large bills: a $1.00 fee on a $2,000 payment is just 0.05%, while 2.9% would be $58. Unless your cashback beats the card fee, the bank transfer wins.
When the card can actually make money
If the card fee is lower than your rewards rate, paying by card can come out ahead even on large bills. For example, paying a $10,000 tax bill through a processor charging 1.85% costs a $185 fee, but a 2% cashback card earns $203.70 on the $10,185 charged, a net gain of about $18.70. Check the processor's current fee and your card's terms first: some cards don't earn rewards on tax payments or other specific transactions.
Assumptions and limitations
- You pay the card in full: if you carry a balance, card interest quickly wipes out any cashback.
- Rewards are valued at face value: points and miles can be worth more or less than 1 cent each depending on how you redeem them.
- No other perks: sign-up bonus spending requirements or purchase protection aren't included, though they may matter to you.
Frequently asked questions
What if the bank transfer is free?
With a $0 bank fee, the card only wins if your cashback rate is higher than the card fee. At 2.9% + $0.30 with 2% cashback, the bank transfer is always cheaper, and the calculator will say so.
Do I earn cashback on the processing fee?
Usually yes, because the fee is part of the total charged to your card. The calculator assumes rewards on the full charged amount. If your card treats the fee separately, your real result will be slightly worse.
Is it worth paying a fee to reach a sign-up bonus?
It can be. A small net cost may be worth it if it helps you reach a large welcome bonus you'd otherwise miss. The calculator shows the cost of the payment itself, so you can weigh it against the bonus.
Does a debit card work the same way?
Debit card fees are often lower flat fees, but most debit cards don't earn rewards. Enter your debit fee as the card fee with 0% cashback to compare.