Money

The best cash back credit cards

Credit card coffee purchase
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Cash back credit cards, if paid off in full each month, can net you hundreds of dollars a year. But with so many options, from one-time bonuses to quarterly rewards, it's easy to get overwhelmed.

To determine which card offers the best deal overall, CNBC Make It analyzed 25 of the most popular cash back cards in the U.S. Using a sample budget based on spending data from the Bureau of Labor Statistics, we estimated how much money each card would save you after five years.

We also evaluated the ease of use of each card and their potential downsides, including annual fees and interest rates.

Based on the data, here is our No. 1 choice, our runner up and some other good options that may be better suited to your lifestyle.

Our pick for the best cash back card

Chase Freedom® Credit Card
The Chase Freedom requires no annual fee and has rewards that beat out the competition. It offers a $150 sign-up bonus, 5 percent cash back on purchases in multiple great categories that change every quarter, and 1 percent on all other purchases. Keep reading for our full analysis of the Chase Freedom card.

Our runner-up

Citi® Double Cash Card
The Double Cash card is another great overall choice because it makes for easy saving: Users get 2 percent back on everything, pay no annual fee and don't have to worry about category changes or spending strategically to maximize rewards. It also now offers a $100 bonus. Keep reading for our full analysis of the Citi Double Cash card.

How we decided

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.

Why we chose Chase Freedom as our No. 1

What primarily distinguishes Chase Freedom is its loaded categories. In the first quarter of 2018, users received 5 percent cash back at gas stations, on internet, cable and phone services and on general purchases made via Chase, Google, Apple and Samsung Pay. The second quarter offers 5 percent on groceries and, again, on purchases made via Chase Pay and PayPal.

If you hit the $1,500 combined purchase limit each quarter, you save $300 per year, plus what you earn from the unlimited 1 percent on all other purchases.

The Chase Freedom card saves you even more money if you take advantage of an extra perk: Pair it with a card like Chase Sapphire Preferred in the same Chase account, and you can convert your cash back points to Ultimate Rewards points. For every dollar you spend, you receive 5 points, so instead of earning $300 cash back, you could receive 30,000 points. Depending on how those points are redeemed, sometimes they can more than double your return.

The Chase Freedom Unlimited Card also offers this conversion perk, though instead of rotating categories, it has a flat rate of 1.5 percent cash back on all purchases. According to our analysis, it's not going to save the typical spender as much as the Chase Freedom over a five-year period.

The thing to watch out for with both of these cards is the variable APR. If you aren't able to pay off your balance each month, the interest rate you'll pay on your debt will be relatively high.

  • Cash back: 5 percent on up to $1,500 in combined purchases in quarterly categories; unlimited 1 percent on all other purchases
  • Annual fee: $0
  • Bonus: $150 if you spend $500 within first 90 days
  • Introductory APR: 0 percent on purchases and transfers for first 15 months
  • Variable APR: 16.49 to 25.24 percent based on your credit score
  • Foreign transaction fee: 3 percent
  • Estimated return after five years: $1,900

Why Citi Double Cash is a close second 

With a flat rate of 2 percent cash back on all purchases — 1 percent when you shop and 1 percent when you pay your bill — the Citi Double Cash card is perfect for those who want to save big without worrying about how they are spending their money. It offers a $100 sign-up bonus, no annual fee, no limits and no rotating categories, making its appeal universal.

For example, if you don't drive a car, this card will probably save you more than one that offers a lot of cash back on gas one quarter. If you never cook, meanwhile, this card will save you more than one that rewards grocery shopping. And if you're a big spender, there's no need to worry about a cash-back cap.

While it might not net the average spender quite as much as the Chase Freedom every year, it does offer a slightly lower interest rate, and it promises the best introductory APR on balance transfers of any card featured on this list, providing users an opportunity to pay off debt.

Just be sure to redeem your rewards if you stop using the card. They will expire if you don't earn any cash back over 12 months.

  • Cash back: 1 percent on purchases and 1 percent when you pay off your bill
  • Annual fee: $0
  • Bonus: $100 if you spend $500 within first 3 months
  • Introduction APR: 0 percent for 18 months on balance transfers
  • Variable APR: 14.99 to 24.99 percent based on your credit score
  • Foreign transaction fee: 3 percent
  • Estimated return after five years: $1,870

Best of the rest...

Of course, if you do most of your spending in one specific category or have particular priorities, a different card might be best for you. Here are our other top picks:

If you want a big sign-up bonus

Discover it® - Cashback Match™
Like Chase Freedom, the Discover it card offers 5 percent cash back on rotating categories. But instead of a $150 sign-up bonus, it matches all the cash back you earn in your first year, potentially earning you twice Chase's first-year bonus. It has some enticing category offers, too: In the fourth quarter of 2018, users will save on purchases they make on Amazon.com and select wholesale clubs.

It also has no foreign transaction fee, so you won't get dinged if you use it outside the U.S.

  • Cash back: 5 percent cash back bonus on quarterly rotating categories on up to $1,500 in purchases. 2018 category features include spending at gas stations, wholesale clubs, grocery stores, restaurants and Amazon; 1 percent on all other purchases
  • Annual fee: $0
  • Bonus: Discover matches all cash back the first year
  • Introductory APR: 0 percent on purchases and transfers for first 14 months
  • Variable APR: 13.49 to 24.49 percent based on your credit score
  • Foreign transaction fee: None
  • Estimated return after five years: $1,810

If you love to cook

Blue Cash Preferred® Card from American Express
The Blue Cash Preferred card rewards people who like to cook with a whopping 6 percent cash back on groceries year-round, making it the best option for those who spend a lot on food. It also offers 3 percent at gas stations and at some department stores.

Even with a $95 annual fee, this card can save home chefs a lot of money, especially if you qualify for its $200 sign-up bonus.

  • Cash back: 6 percent at U.S. supermarkets on up to $6,000 in purchases a year; 3 percent at U.S. gas stations and department stores; 1 percent on all other purchases
  • Annual fee: $95
  • Bonus: $200 if you spend $1,000 within first three months
  • Introductory APR: 0 percent for 12 months on balance transfers
  • Variable APR: 14.49 to 25.49 percent based on your credit score
  • Foreign transaction fee: 2.7 percent
  • Estimated return after five years: $1,780

If you love to dine out

Capital One® Savor® Cash Rewards Credit Card
With its offer of unlimited 3 percent cash back on all restaurant spending, Capital One's Savor card may be your best option if you go out to eat a lot. The card also promises 2 percent cash back on groceries, a $150 bonus, no annual fee and no foreign transaction fee.

  • Cash back: 3 percent on dining; 2 percent on groceries; 1 percent on all other purchases
  • Annual fee: $0
  • Bonus: $150 if you spend $500 in first 3 months
  • Introductory APR: 0 percent on purchases and transfers for first 15 months
  • Variable APR: 15.99 to 24.74 percent based on your credit score
  • Foreign transaction fee: None
  • Estimated return after five years: $1,500

If you have average credit

Capital One® QuicksilverOne® Cash Rewards Credit Card
Most cash back cards require you to have good-to-excellent credit, meaning a credit score of 700 to 850, but Capital One's QuicksilverOne card is available to people with just average credit, or scores roughly between 650 and 700. With no foreign transaction fee, the card offers 1.5 percent cash back on all purchases.

It doesn't have a sign-up bonus and does require a $39 fee, however, so it won't save you as much as the other cards featured on this list. Still, it's a great card to use to improve your credit score, as long as you pay off your balance each month and don't get stuck paying off debt at that high interest rate.

  • Cash back: 1.5 percent on all purchases
  • Annual fee: $39
  • Bonus: None
  • Introductory APR: None
  • Variable APR: 19.99 to 26.99 percent based on your credit score
  • Foreign transaction fee: None
  • Estimated return after five years: $1,130

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