Interesting. So, you're saying fee is already spent, and it shouldn't be part of benefit calculation (cashback + discount) and not meant for recovery.
Now, A. make sense.
yeah, this is huge area where one might lost
but good to know more about opportunity cost..
https://www.technofino.in/community...rs-vs-stan-chart-rewards-360.8471/post-134404
You are on right track there. But slight mistake.
So net benefit is 15000×.95 -900-118=13232
This is what you gained in absolute term.
But if you do cba for % return it will be
15000× .95/(4.5L+900+118) .
See this is not a exact science. Calculation will vary depending on person.
Let's take the example of infinnia.
Let's say you spent 8L for which got 1L rp. Then annual fee 12.5k, 2.25k gst.
There are so many option to redeem. For me best option is tanishq at 1:1.
Total rp 1,12,500. But I wouldn't value at 1:1. Its easy to get neu infinity where you could get 5% off. Some even get at 7-8% in gv. There is tiem value of money. As you ll redeem may be once in a year or year & half. So need to discount again by around 10%. Plus cash is king. May be I wasn't planning to buy gold right now due to high price. Plus tanishq charge more than other good jeweler. So all in all need to discount around 20%. (Technically 1,12500×.93(for gv to calculate actual value)×.9( for time value of money)×.95( for factors like higher charge by tanisq, for not getting the best possible option I.e. real cash back)
So % return using cba will be
1,12500×.8/(8L+12.5k+2.25k) =11%
If you use for hotel /air travel it will be even more complex.
You have to consider higher price in smart buy, leaving good deals in other platform, when you buy you can redeem only 70% or 50% by rp, rest has to be paid by card, but the rest amount paid by card will also get 5x,10x
Many people also don't consider the cost associated with tiem and mental peace in tracking, forced spend, being locked in an ecosystem ( you might have other better option for a particular transactions but you continue to use the same card to reach milestones). If I start diving deeper I will find 100s of factors to consider, which isn't practical.