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The travel rewards credit card market is always evolving, with new opportunities popping up just as fast as others disappear. While this year will spell the end of some cards and benefits, we’ve also seen new ones arise, like primary rental insurance on the Chase Sapphire Preferred, and the launch of the new Citi Double Cash card. This week it’s Bank of America’s turn to make waves; read on to find out just how big those waves are, and whether you should get your swimsuit.
Apart from a few co-branded airline cards, Bank of America has mostly focused on cash back cards (like the BankAmericard Cash Rewards™ credit card) and travel rewards cards that earn a fixed rate of return (like the BankAmericard Travel Rewards® credit card). Both of these cards provide fairly simple earning and redeeming formulas; you earn a certain number of points per dollar depending on the card and bonus categories, and you can redeem those points at one cent apiece for cash back or travel purchases. It’s straightforward, but not terribly exciting.
However, Bank of America is now spicing things up a bit by introducing a new points program called Preferred Rewards that targets high-value banking customers, and can boost your points-earning potential by up to 75%. While this is not the new transferable points program that Nick Ewen wrote about in The Weekly Wish last month, and these cards come with some fairly rigorous minimum balance requirements, Preferred Rewards is a step in the right direction, and one that makes BofA’s cash back cards more competitive with the other top cash-back cards out there.
To enroll in Preferred Rewards, you need to fulfill the following requirements:
- Have an eligible Bank of America personal checking account
- Maintain a 3-month average combined balances of $20,000 or more in qualifying Bank of America banking accounts and/or Merrill Edge and Merrill Lynch investment accounts.
Those are just the basic requirements, and there’s no fee to enroll or participate. However, there are tiers based on your qualifying combined balances.
Preferred Rewards membership has three tiers: Gold, Platinum, and Platinum Honors. All three membership tiers offer up to 4 eligible checking and savings accounts with no monthly maintenance fees, plus no fees on select banking services (such as standard check orders, cashier’s checks, and stop payments), as well as priority customer service with extended hours. Here’s what other benefits you’ll get at each level of membership, and the requirements to qualify.
Gold: checking account and at least $20,000 in combined balances
- 5% Money Market Savings account interest rate booster – this does not mean you’ll earn a 5% return, it just means that you will get a 5% boost based on the current rate of your account (so if your return is currently 1%, your boosted rate would be 1.05%).
- 25% rewards credit card bonus.
- $200 relationship credit at closing of a mortgage.
Platinum: checking account and at least $50,000 in combined balances
- 50% rewards credit card bonus.
- 10% Money Market Savings account interest rate booster.
- $400 relationship credit at closing of a mortgage.
- Up to 12 no-fee withdrawals at non-BofA ATM’s in the US per year (1 per billing statement).
- Up to 30 $0 trades per month with individual or joint Merrill Edge self-directed brokerage accounts.
Platinum Honors: checking account and at least $100,000 in combined balances
- 75% rewards credit card bonus.
- 20% Money Market Savings account interest rate booster.
- $600 relationship credit at closing of a mortgage.
- Unlimited no-fee withdrawals at non-BofA ATM’s in the US.
- Up to 100 $0 trades per month with individual or joint Merrill Edge self-directed brokerage accounts.
New Earning Rates
There are a lot of variables here depending upon your tier and the specific card you carry, but generally, BankAmericard Travel Rewards® cardmembers who now earn 1.5 points per dollar on purchases would earn between 1.875-2.625 points per dollar. This isn’t earth-shattering, but a consistent 2.625% return for Platinum Honors members is very solid, and usually beats the return offered by other comparable back cards.
BankAmericard Cash Rewards™ Credit Card members who now earn 1 point per dollar on everyday purchases would earn between 1.25-1.75% return on their spending. Just note: cardholders will not see their points-earning increase with this card. Rather, they get the percentage bonus based on their Preferred level at the time of redemption.
This card earns 1% cash back on every purchase, 2% at grocery stores and now at wholesale clubs, and 3% on gas up to the first $2,500 in combined gas/grocery store/wholesale club purchases each quarter. So if you maxed out the 3% gas bonus, you could be earning 3.75%-5.25% back on up to $6,000 in has purchases annually when you go to redeem your points.
It was about time that Bank of America spruced up its somewhat lackluster rewards program to try and compete with other cash back products like Chase Freedom and Discover It, and fixed-rate travel cards like the Capital One Venture Rewards card and Barclaycard Arrival Plus, but I think BofA could have gone further.
For the sake of context (and argument), let’s say you qualify for either the basic Gold tier or the top Platinum Honors tier.
If you have the BankAmericard Cash Rewards™ Credit Card, as a gold member you’ll earn 1.25 points per dollar on everyday purchases and up to 3.75% back on gas purchases (of up to $6,000 per year). As a Platinum Honors member you’ll earn 1.75 points per dollar on everyday purchases, and up to 5.25% back on gas purchases (again, of up to $6,000 per year).
If you have the BankAmericard Travel Rewards® Credit Card, you’ll earn between 1.875-2.625 points per dollar. Done and done.
On the other hand, if you have the Chase Freedom card – which has no bank or investment account requirements – you earn 1 point per dollar on everyday purchases and up to 5% back on rotating categories of merchants up to $6,000 of purchases per year.
Both the BankAmericard Cash Rewards™ Credit Card and Chase Freedom offer a 10% bonus of sorts – the Bank Americard offers a customer bonus when you redeem cash back into a BofA checking or savings account, and the Freedom bonus offers a 10% annual points bonus on all points earned, though this will end in December 2015.
What this boils down to is that the new cash back earnings boost from Bank of America is not significant unless you’re a high-tier customer and you’re putting a huge amount of spending on your card for the cash back.
The category spending bonuses on the BankAmericard Cash Rewards™ Credit Card are limited; the 10% bonus only applies to cash back redeemed into your BofA account, and the minimum balance requirements are high to achieve any of these Preferred tiers.
So if you’re just looking for a simple, solid, high-performing cash back card, the Chase Freedom would still be my top pick. It has no banking requirements, earns a solid 1% return on everyday spending and 5% on quarterly rotating categories. Plus, it still handily beats the earning and redemption rates for the BankAmericard Travel Rewards® Credit Card if you can max out the 5% rotating categories.
While it’s interesting to see Bank of America offering some enhanced benefits, the hefty account requirements exclude many of their customers. That said, if you’re a BofA customer and you meet the minimum requirements, you should absolutely sign up. Apart from the enhanced credit card benefits, if you do a lot of banking through BofA, all those other benefits could result in significant savings. The free banking services, the ATM withdrawal fee waivers, the mortgage closing credits and the investment account transaction fee waivers, and the savings account rate booster could all equate to hundreds of dollars in savings per year.
With additional reporting by Eric Rosen.