A small follow-up to my cashback math note

Last week I posted a note on Telegraph about why cashback rates on crypto cards are usually misleading. After publishing it I had a few people ask me to put hard numbers behind the abstract claims. So this is a short follow-up rather than a fresh argument.

The original post is here: When crypto card cashback rates are misleading. The idea was that headline rates rarely match what hits your account because of tier requirements, monthly caps, category exclusions, and token volatility.

What I want to add is one example.

Take a card that advertises 5 percent cashback. The fine print usually says something like: 5 percent on grocery and gas categories, 1 percent on everything else, capped at $50 per month, requires staking $1,000 in the issuer's token.

Here is what that looks like for someone spending $1,500 a month with $400 in grocery and gas:

5 percent on $400 = $20 (under the cap, so the full $20 counts). 1 percent on $1,100 = $11. Total: $31 in cashback. Effective rate = $31 / $1,500 = 2.07 percent.

The headline 5 percent becomes 2 percent in practice, and that is before token-volatility risk. If the staked $1,000 in issuer token drops 30 percent in value (which is normal for issuer tokens during a downturn), you have lost $300 in token value to earn around $372 in annual cashback. The math still works, but it is not the 5 percent the homepage advertised.

I built a calculator at sweepbase.net/calculator that estimates effective cashback after caps and category mix. It will not estimate token-volatility risk, that is on you, but the rest is automated.

The uncomfortable conclusion is that for most users a card with a flat 1.5 percent and no staking requirement beats a tiered 5 percent card unless the user spends almost entirely in the high-rate categories. Most users do not.

That is the version of the argument with numbers. Sometimes that helps.