Everything you should know about Bank of America’s Preferred Rewards program
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Points and miles are wonderful for taking care of flights and lodging. But there are many other types of travel expenses. Luckily, using cash-back rewards in combination with your points and miles can make a vacation genuinely free from a monetary perspective.
So, today I’ll take a closer look at the often passed-over Bank of America Preferred Rewards program. Specifically, I’ll consider how consolidating your banking and investment needs in this program can get you some tangible benefits. On top of banking perks, this program can also boost your cash-back earnings on some of the best Bank of America credit cards.
Bank of America designed the Preferred Rewards program to entice consumers to have all of their checking, savings, investment and retirement accounts with Bank of America and Merrill. In short, the more total assets you have with Bank of America and Merrill, the more perks you get. So, let’s take a closer look so you can decide whether it’s time to stop ignoring Bank of America Preferred Rewards.
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To qualify for the Bank of America Premium Rewards program, you must have both of the following:
- An eligible Bank of America personal checking account
- A three-month average combined balance of $20,000 or more in qualifying Bank of America deposit accounts and Merrill investment accounts
Once you have a total of $20,000 in assets between qualifying Bank of America and Merrill investment accounts, you qualify for the program’s Gold tier. $50,000 in total assets qualifies you for the Platinum tier and $100,000 in total assets qualifies for you for the Platinum Honors tier.
How to reach the required balance
You must have an eligible Bank of America personal checking account and an average daily balance of at least $20,000 in qualifying Bank of America and Merrill investment accounts for three months to qualify for Bank of America Premium Rewards.
If you have an emergency fund, holiday account, savings account and checking account, combining all those balances could qualify you for the first tier. Once you add in investment accounts, including IRAs, you may even find that the Platinum or Platinum Honors tier is within reach.
Balances don’t have to be started with Merrill or Bank of America to count. Specifically, you can roll existing IRAs and investment accounts over to Merrill or Bank of America and immediately use those balances to begin establishing a three-month average to boost your tier. Of course, you’ll have to consider other things like account management fees and available investment options to decide whether doing so is a good option.
How to move between Preferred Rewards tiers
You may move up a tier in any month after your average daily balance for the three previous months reaches the next threshold. However, once you reach a tier, you’ll maintain your Preferred Rewards tier status for 12 months.
If you no longer meet the checking account or balance requirement of your current tier after 12 months, Bank of America will give you a three-month grace period. If you still don’t meet the criteria after the three month grace period, you’ll either be moved to a lower tier or completely lose your Preferred Rewards benefits.
That means if you reach the $100,000 average daily balance threshold for three months, Bank of America will upgrade you to Platinum Honors. Then, even if your average daily balance drops below $100,000, you’ll maintain Platinum Honors for 15 months before being downgraded.
Here’s a chart of the three Bank of America Preferred Rewards tiers and the associated benefits of each tier:
|Savings interest rate booster||5%||10%||20%|
|Credit card rewards bonus||25%||50%||75%|
|Mortgage origination fee reduction||$200||$400||$600|
|Auto loan interest rate discount||0.25%||0.35%||0.50%|
|Home equity interest rate discount||0.125%||0.25%||0.375%|
|No-fee banking services||Included||Included||Included|
|Free non-Bank of America ATM transactions||0||12/year||Unlimited|
|Merrill Guided Investing fee discount||0.05%||0.10%||0.15%|
Now, let’s take a closer look at each of these benefits.
Savings interest rate booster
You need to have a Bank of America Advantage Savings account and be an enrolled Preferred Rewards member to enjoy this benefit. If you have an existing savings account, it will not automatically convert to a Bank of America Advantage Savings account when you enroll in Preferred Rewards. So, be sure to request the conversion when joining Preferred Rewards.
A 5% boost increases your interest rate by 5%. For example, if your interest rate is 1.00%, a 5% rate booster would increase the interest rate to 1.05%. Here’s the current annual percentage yield on a Bank of America Advantage Savings account for a sample Florida resident:
You can check how this boost would affect the current annual percentage yield on a Bank of America Advantage Savings account in your region here.
Credit card rewards bonus
Preferred Rewards members earn a 25%, 50% or 75% rewards bonus on select Bank of America cards. For credit cards that earn points or cash rewards, you’ll get your rewards bonus on every purchase. As such, your earning rate is based on your Preferred Rewards tier when the purchase posts to your account.
Most Bank of America branded consumer credit cards are eligible to receive the Preferred Rewards bonus. Specifically, you can earn the Preferred Rewards bonus on the Bank of America® Premium Rewards® credit card, the Bank of America® Travel Rewards credit card and the Bank of America® Customized Cash Rewards credit card.
However, the following cards are not eligible for the rewards bonus:
- Non-rewards credit cards
- Business purpose credit cards
- BankAmericard Better Balance Rewards®
- Merrill branded (including MERRILL+®, Octave®, American Express® and Private Banking and Investment Group Octave® American Express®)
- U.S. Trust® Octave® American Express®
- AAA® Gas Rebate
- Air France KLM World Elite Mastercard®
- Alaska Airlines®, including the Alaska Airlines Visa Signature® credit card
- Allegiant World MasterCard®
- Amtrak Guest Rewards®
- Asiana Airlines®
- Celebrity Cruises®
- Royal Caribbean International®
- Sonesta World MasterCard®
- Spirit Airlines®
- Virgin Atlantic Airways®, including the Virgin Atlantic World Elite Mastercard®
Mortgage origination fee reduction
Any time you can cut down on fees for buying or refinancing a home, count me in. You’re eligible to receive the discount beginning three business days after the end of the calendar month in which you satisfy the Preferred Rewards tier qualification requirements.
The origination fee reduction can’t exceed the amount of the lender origination fee. The Preferred Rewards fee reduction isn’t transferrable. And, you may not be able to combine this fee reduction with other discounts.
Auto loan interest rate discount
You must complete an auto purchase finance or refinancing loan through Bank of America to qualify for this rate discount. This benefit is not transferrable, so only the Preferred Rewards member can use this perk.
Of course, you’ll need to make sure that Bank of America offers the most competitive rate after the discount. A small difference of just a quarter of a percent could save or cost you thousands of dollars over the life of the loan.
Home equity interest rate discount
You can get a home equity line of credit interest rate discount beginning three business days after the end of the calendar month in which you satisfy the Preferred Rewards tier qualification requirements. This benefit is non-transferable. But, you may be able to combine this perk with other home equity interest rate discounts. And, you’re still eligible even if you’re a co-borrower.
No-fee banking services
Preferred Rewards Gold, Platinum and Platinum Honors members receive the following banking services:
- Monthly maintenance fees waived on up to four eligible checking and four savings accounts from Bank of America
- No fees for ATM or debit card replacement, including rush replacement, standard check orders, cashier’s checks, check image service, check copies, stop payments and incoming domestic wire transfers
- Overdraft protection transfer fees waived from your linked savings accounts, secondary checking accounts or from a Home Equity Line of Credit
Additionally, Platinum and Platinum Honors members have no fees for incoming international wire transfers and can receive a small safe deposit box for free at a Bank of America branch.
Free non-Bank of America ATM transactions
In the U.S. and U.S. territories, Platinum and Platinum Honors members:
- Won’t be charged non-Bank of America ATM fees
- Will receive a refund of the ATM operator or network fee for withdrawals, balance inquiries and balance transfers
Platinum members receive one free transaction a month (12 annually) and Platinum Honors members have no cap.
Merrill Guided Investing fee discount
Preferred Rewards members receive a fee discount when utilizing Merrill Guided Investing services. You can get started with as little as $5,000 for Merrill Guided Investing or $20,000 for Merrill Guided Investing with an advisor.
Merrill Guided Investing typically charges a fee of 0.45% of assets under management. And, Merrill Guided Investing with an advisor typically charges 0.85% of assets under management. While those fees might seem small, they add up over time. As such, these fees can turn into a compound drain on your investments. So, it’s best to look for a financial advisor that charges a fixed fee instead of a percent of your assets.
How to maximize cash-back earning on Bank of America credit cards
To maximize the Bank of America Preferred Rewards program, you’ll want to qualify for Platinum Honors and be eligible for the 75% credit card rewards bonus. Of course, I don’t recommend making investment and banking decisions based entirely on added credit card rewards. It may be worthwhile if you can work with Merrill and park a rainy-day fund in Bank of America.
Bank of America Premium Rewards credit card
The Bank of America Premium Rewards credit card is an excellent fixed-value card in its own right. But it gets even more competitive when you add in the bonus from the Preferred Rewards program.
The card carries a $95 annual fee and offers a modest selection of benefits. For example, cardholders get an up to $100 annual airline incidental fee statement credit, a Global Entry or TSA PreCheck application fee credit every four years (up to $100) and some decent travel protections.
However, this card shines with its earning rates on everyday spending, travel and dining. Here’s how the earning rates stack up once you consider the Preferred Rewards credit card rewards bonus:
|Spend categories||Regular cardholder||Preferred Rewards Gold (25% bonus)||Preferred Rewards Platinum tier (50% bonus)||Preferred Rewards Platinum Honors tier (75% bonus)|
|Travel and dining||2x points||2.5x points||3x points||3.5x points|
|Everything else||1.5x points||1.875x points||2.25x points||2.625x points|
You can redeem points using the Bank of America Premium Rewards card at a rate of one cent per point. So you can get a return of at least 2.625% on all purchases with this card if you hold Preferred Rewards Platinum Honors status. This great return makes the Bank of America Premium Rewards credit card one of the best credit cards for everyday spending.
Bank of America Travel Rewards credit card
If you’re not looking to pay an annual fee, you could opt for the Bank of America® Travel Rewards credit card. The Travel Rewards card earns 1.5x points on all purchases. And points earned via the Travel Rewards card can be redeemed to cover travel purchases at a rate of one cent per point. You can also redeem points for gift cards or cash, but you’ll get a lower value for these options.
By earning 1.5x points on everything plus a 75% Preferred Rewards bonus as a Platinum Honors Preferred Rewards member, you effectively earn 2.625% cash back toward travel purchases made with the card. That’s a fantastic cash-back rate to earn on all spending.
Bank of America Customized Cash Rewards credit card
Another no-annual-fee card to look at is the Bank of America® Customized Cash Rewards credit card. This card earns 2% at grocery stores and wholesale clubs. Plus, you can earn 3% in one of the following categories: gas, online shopping, dining, travel, drug stores or home improvement/furnishings. However, you can only earn 3% and 2% on up to $2,500 in combined purchases each quarter. All other purchases earn 1%.
So, as a Preferred Rewards Platinum Honors member, you’ll earn 5.25% cash back on your 3% category, 3.5% cash back on grocery stores and wholesale clubs and 1.75% cash back on all other purchases. That’s pretty awesome for a no-annual-fee cash-back rewards card.
The Bank of America Preferred Rewards program is probably not worth pursuing unless you qualify for Platinum Honors and maximize the 75% bonus on credit card earnings. But, the program’s perks mean that if you already do business with Bank of America or Merrill, you should consider consolidating your banking and investing to boost your rewards and benefits.
It might even be worth switching to Bank of America if doing so won’t cost you anything extra. After all, the Preferred Rewards program can tip the scale on some of Bank of America’s top card offerings.
Additional reporting by Katie Genter and Ethan Steinberg.
Featured photo by Wyatt Smith/The Points Guy.
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