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Understanding Blended Rewards Rates: How to Compare Cards with Different Point Systems
July 1, 2025
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When you're comparing credit cards, one earns 3X points on dining, another gives 4% cash back on groceries, and a third offers 2 miles per dollar everywhere. Which one actually earns you more?
This isn't just about picking the card with the biggest number. The real question is: what's your blended rewards rate—the actual value you're getting across all your spending?
What Is a Blended Rewards Rate?
Your blended rewards rate is the weighted average return you get across all your spending categories. It accounts for bonus categories, base earning rates, and point valuations to show your real-world earnings.
Here's why it matters: A card advertising "5X points" might sound incredible, but if those points are only worth 0.5 cents each and you rarely spend in that category, you're actually earning less than a simple 2% cash back card.
According to Bankrate, most credit card points are worth approximately 1 cent per point, though this can vary significantly based on redemption method and transfer partners.
The Math Behind Blended Rates
The formula:(Category 1 spend × earning rate × point value) + (Category 2 spend × earning rate × point value) ÷ Total spend = Blended rate
Don't worry—we'll walk through real examples below.
Step 1: Calculate Your Spending Distribution
Before you can compare cards, you need to know where your money actually goes. Most people overestimate how much they spend in bonus categories and underestimate their everyday spending.
Track these categories for one month:
- Dining and restaurants
- Grocery stores and supermarkets
- Gas stations
- Travel (flights, hotels, car rentals)
- Streaming services and subscriptions
- Everything else (base spend)
Quick tip: Connect your cards to Kudos to automatically track your spending by category. You'll see exactly where your money goes—no spreadsheets required.
Step 2: Understand Point Valuations
Not all points are created equal. Here's what popular rewards currencies are actually worth:
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Why this matters: If you earn 3X points worth 0.6 cents each, you're getting 1.8% back. But 2% cash back gives you 2.0% back—a better deal.
Point valuations are estimates based on typical redemption scenarios and can change at any time. Transfer partner values represent the upper range of what points could be worth when transferred to airline or hotel loyalty programs—your actual value will vary based on specific redemptions, availability, and how you use your points. Baseline values reflect standard redemptions like statement credits or direct purchases through issuer portals. For the most current valuations and redemption options, check your card issuer's terms and conditions.
Step 3: Calculate Real-World Blended Rates
Let's compare five popular cards using a realistic spending profile:
Monthly spending:
- Dining: $600
- Groceries: $500
- Gas: $200
- Travel: $300
- Everything else: $1,400
Total: $3,000/month
When Transfer Partners Change Everything
The calculations above use conservative point valuations. But if you're willing to transfer points to airline and hotel partners, the game changes completely.
The catch: You need to actually use those transfer partners. If you're not booking award flights or hotel stays, stick with cash back valuations.
The Multi-Card Strategy: Maximum Blended Rate
Here's the truth: no single card maximizes every category. The highest earners use multiple cards strategically.
Example combination:
[[ COMPARE_CARD * {"ids": ["118", "2885", "580"], "bestCategoryIds":["17", "18", "19"], "bestForTexts":["Generous Travel Rewards", "Flexible Cash Back Perks", "Simple Rewards"]} ]]
Should You Apply? Use This Decision Framework
✅ Apply for a points card if:
- You travel at least 2-3 times per year
- You're willing to research redemption options
- Your spending aligns with bonus categories
- You can hit welcome bonus spending requirements
✅ Stick with cash back if:
- You value simplicity over optimization
- You rarely travel
- Your spending is spread across many categories
- You want guaranteed, predictable value
How Kudos Simplifies This Entire Process
Manually calculating blended rates for every purchase? Nobody has time for that.
Kudos automatically:
- Tracks your spending by category
- Calculates real-time point valuations
- Recommends the best card for each purchase
- Shows your actual blended rate across all cards
The result: You earn an average of $441 more per year without thinking about it.
Common Mistakes That Kill Your Blended Rate
Mistake #1: Ignoring annual fees
That 2.3% blended rate? Subtract a $95 annual fee from the equation. On $36,000 spend:
- Gross earnings: $828
- Net earnings after fee: $733
- Actual blended rate: 2.04%
Mistake #2: Leaving points unused
The average cardholder has $624 in unused perks sitting in their accounts. Those points aren't earning you anything until you redeem them.
Mistake #3: Chasing welcome bonuses only
A 100,000-point welcome bonus might look impressive, but if the card's ongoing earn rate doesn't match your spending, you'll earn less in year two.
Mistake #4: Not tracking category caps
That 5% on groceries? It's capped at $6,000/year for many cards. Once you hit the cap, you're earning 1%—tanking your blended rate.
FAQ: Blended Rewards Rates
What's a good blended rewards rate?
For most spenders, 2-2.5% is solid. Heavy optimizers using multiple cards and transfer partners can reach 3-4%. Under 1.5% means you're leaving money on the table.
How often should I recalculate my blended rate?
Review quarterly or when your spending patterns change significantly (new job, moved cities, lifestyle changes).
Do annual fees count against my blended rate?
Yes. Subtract annual fees from your total rewards earnings, then divide by total spend for your true net rate.
Is it worth having multiple rewards cards?
If you can responsibly manage them and the strategy earns you $150+ more per year, absolutely. For most people, 2-3 cards is the sweet spot.
What if I can't hit welcome bonus spending requirements?
Don't force unnecessary spending. A card with a lower welcome bonus but better ongoing earning might deliver more long-term value.
The Bottom Line: Math Over Marketing
The card with the biggest advertised bonus isn't always the winner. The only number that matters is your actual blended rewards rate based on your real spending.
Take 10 minutes to:
- Track your spending categories
- Calculate point valuations
- Run the math on your top card options
- Let Kudos automate the rest
The difference between guessing and knowing? An extra $850/year in your pocket.
Unlock your extra benefits when you become a Kudos member
Turn your online shopping into even more rewards
Join over 400,000 members simplifying their finances
Editorial Disclosure: Opinions expressed here are those of Kudos alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
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