Is the Bank of America Premium Rewards Card Worth the $95 Annual Fee?

Oct 17, 2018

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The Bank of America®️ Premium Rewards®️ credit card has potential to be one of the highest-earning cash-back rewards cards in the market today, but carries qualification requirements and of course an annual fee. Today, I’ll review the benefits of the card to help you decide whether the $95 annual fee is worth paying for cardmembership.

The amount of financial holdings you have within Bank of America and Merrill will determine how much cash back the Bank of America®️ Premium Rewards®️ card will earn. The card works in conjunction with Bank of America Preferred Rewards Program, so make sure you understand the infrastructure and tiers of that rewards system. Based on your tier within the Preferred Rewards Program (which you need to sign up for separately), the Premium Rewards Card will earn the following points:

Spend Categories Regular Cardholder Tier 1 – Gold ($20,000 – $50,000) Tier 2 – Platinum ($50,000 – $100,000) Tier 3 – Platinum Honors ($100,000+)
Travel/Dining Earnings 2x points 2.5x points 3x points 3.5x points
Other Earnings 1.5x points 1.875x points 2.25x points 2.625x points

Each point is worth 1 cent toward cash back into your Bank of America deposit account or Merrill Lynch or 529 college savings account. You can redeem points for covering travel purchases or gift cards, but I recommend you just stick to cash back. With the basic rewards structure of the card covered, let’s look at all the card benefits and decide which ones could make the annual fee worthwhile, and which ones could make paying $95 hard to justify.

What Benefits Are Worth the $95 Annual Fee?

Sign-Up Bonus — Earn 50,000 points after spending $3,000 in the first 90 days of account opening. That’s worth $500 deposited into your checking, savings or investment account. It’s a pretty easy decision to pay $95 and get $500, assuming you have an easy plan to meet the minimum spend requirement. This bonus, of course, is not repeated for subsequent years of cardmembership, when you’ll still have to pay $95.

Airline Incidental Fee — You are eligible to receive an up to $100 airline credit to cover purchases such as seat upgrades, baggage fees, in-flight services and lounge fees. Airfare is not included in what qualifies for reimbursement, though things like purchasing a seat upgrade could qualify depending on the airline. You receive the credit every year, and if you’re able to use the full amount, you’re essentially getting paid $5 a year to be a cardholder. Take away any other benefits listed here, and you’re already coming out ahead if you can maximize the credit.

Rewards for Platinum and Platinum Honors Preferred Rewards Members — If you have an average daily balance for three months of at least $50,000 in assets between your Bank of America accounts and Merrill accounts, you qualify for the Platinum tier in Preferred Rewards — significant for pushing your baseline rewards earnings over the 2% cash-back level. There are several cards, like the Citi® Double Cash Card (1% back when you buy plus 1% when you pay) and Fidelity Rewards Visa card, that can earn anyone 2% cash back on all purchases, so being at least Platinum pushes the Premium Rewards Card past most of the other competition.

Once you’re Platinum Honors, earned with an average daily balance over $100,000 over the course of three months, your baseline cash back is 3.5% on travel and dining and 2.625% on all other purchases. That’s significant compared to other competitor cards, most of which don’t offer the other benefits listed in this section. While earning transferable points can often give you a higher value, you still need cash-back rewards to cover the expenses of travel those transferable points cannot erase.

Global Entry Credit — Every four years the cardholder will receive an up to $100 Global Entry credit which can be used to cover the Global Entry or TSA PreCheck enrollment fee. If you have not yet signed up for Global Entry, this card will effectively pay you $5 to sign up or re-up your membership once every four years.

What Benefits May Not Be Worth the $95 Annual Fee?

Duplicate Benefits — If you’re holding other premium rewards cards to earn transferable points, some of the benefits the Bank of America®️ Premium Rewards®️ card offers can be duplicate or not as generous. Many cards also now offer Global Entry credits, which you only really need to use once every four or five years. If you hold an American Express, Citi or Chase card to earn those point currencies, you likely already have many of the travel benefits covered, and they may offer more protection.

Rewards for Regular and Gold Tier Preferred Rewards Members — If you hold no tier or only Gold tier status in the Preferred Rewards Program, your baseline cash back is less than 2%. As previously mentioned, other cards can therefore earn you more cash back, even with no annual fee like the Citi® Double Cash Card.

Dining 2
I typically budget my cash-back rewards to cover meals during trips.

Secondary Rental Car Insurance — This collision damage waiver (CDW) coverage will only kick in after your personal insurance covers the maximum allowed in your policy. That makes the secondary coverage not very valuable in my opinion and doesn’t stack up to the primary coverage the Chase Sapphire Preferred Card and Chase Sapphire Reserve provide.

Bottom Line

Stated plainly, if you qualify for Platinum or Platinum Honors tiers in the Preferred Rewards program, you should be looking to sign up for the Bank of America®️ Premium Rewards®️ credit card. The ability to earn up to 2.625% cash back on the majority of purchases and up to 3.5% cash back on travel and dining is fantastic. That much cash back can easily subsidize your transferable points earnings and cover cash travel expenses.

Even without top-tier Preferred Rewards membership, a 50,000-point bonus ($500 value) and the $100 annual airline incidental fee means the card practically pays you to be a member.

Featured image by Smith Collection/Gado via Getty Images.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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