To determine which cards offer the best cash back deals, CNBC Make It compiled a list of 25 highly rated credit cards. We vetted each card based on its cash back offer, introductory and eventual APR, annual fee, bonus, recommended credit score, late fee, balance transfer fee, foreign transaction fee, redemption options and customer reviews.
We then estimated how much money each card would save the typical American after one year, two years and five years. Our assessment heavily weighs the five-year return to avoid a large sign-up bonus skewing the results. We also assume that most people want a great card that they can stick with for years, especially since bouncing from card to card can be bad for your credit score.
To estimate the return, we used expenditure data from the Bureau of Labor Statistics to make a sample budget broken down by average annual spending in categories like gas ($1,909), groceries ($4,049), dining out ($3,154) and general purchases ($10,529). The general purchase category includes shopping, entertainment, public transit and vehicle expenses other than gas. It's worth noting that the five-year estimates we include below are derived from this single sample budget, but if you use a card strategically and take advantage of its rewards, your return could be higher.
The estimates also incorporate bonuses and assume you have a high credit limit and that you use your card for 90 percent of the purchases you make in these categories, accounting for instances where you have to use cash or shop somewhere that doesn't accept your card.
In the case of the Citi Double Cash card, calculating the return was relatively easy, as users simply save 2 percent on all its purchases. For a card like the American Express Blue Cash Preferred, meanwhile, we calculated the potential returns in each category, since the card offers 6 percent back on groceries, 3 percent on gas and select department stores and 1 percent on everything else.
Sometimes we had to make assumptions. For instance, Chase has not announced all of its 2018 categories yet, so we averaged and extrapolated the returns from the first half of the year. The Discover It Cashback Match card, meanwhile, rewards spending on Amazon.com and at select wholesale clubs one quarter, so in this case we decided users would be rewarded for 30 percent of their general spending.
Once we had our estimates, we then weighed cash returns against other factors including interest rates and fees, cash-back categories, practicality, bonuses and other perks.