Customize your rewards structure: Bank of America Cash Rewards credit card review

May 19, 2020

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Bank of America Cash Rewards Card Overview

The Bank of America® Cash Rewards credit card is a solid cash-back credit card, offering a customizable rewards structure that is great for anyone who’s spending habits change throughout the year. The card can become quite lucrative for anyone with a significant banking or investing relationship with Bank of America. Card Rating*: ⭐⭐⭐½

*Card Rating is based on the opinion of TPG’s editors and is not influenced by the card issuer.

Although Bank of America’s credit card lineup may not be as flashy as the travel cards offered by issuers like Chase or Amex, that doesn’t mean you should count them out when considering your rewards strategy. Some of these cards have a lot to offer — especially if you’re an existing Bank of America customer. The Bank of America Cash Rewards credit card, for example, offers a unique choose-your-bonus-spending-category rewards structure and an easy-to-hit sign-up bonus.

In This Post

Who is this card for?

Bank of America’s cash-back credit card is perfect for existing Bank of America customers who want to dip their toes into the credit card rewards game. The card has no annual fee and high earning potential for cardholders who qualify for Bank of America Preferred Rewards. Busy families or those whose spending habits fluctuate throughout the year can also get value from the card’s choose-your-category rewards structure, which you can adjust as often as every month to fit your spending habits.

Keep in mind that the card limits its bonus categories to $2,500 in combined spending each quarter, so those who spend more than that can get more value elsewhere. Furthermore, the redemption options are best suited for those with existing Bank of America accounts.

The card earns cash back, which can be redeemed in the form of a statement credit or deposited into eligible Bank of America or Merrill accounts. You don’t have to worry about point valuations or a wide range of potential redemption options – something that might not appeal to frequent travelers who can often get more value by taking the time to strategize redemptions. Beginners, however, might enjoy the simplicity of the redemption process.

(Photo by Orli Friedman / The Points Guy)
This card is best suited for those who want the flexibility to choose their own bonus category each month. (Photo by Orli Friedman/The Points Guy)

Solid $200 welcome bonus

The Bank of America Cash Rewards credit card offers a modest $200 cash-back bonus after spending $1,000 on purchases within the first 90 days of account opening. It’s certainly not the most competitive bonus out there, but it’s easy to earn and on par with other no-annual-fee credit card bonuses.

A $200 bonus isn’t going to get you a round-trip ticket to Iceland when it reopens to international travelers in June, but you can find some domestic fares for under $200, depending on where you live. Plus, $200 is a nice discount on a more expensive plane ticket. You can also use it to cover general expenses, which may be preferable for those who don’t plan on traveling anytime soon.

Related reading: Cash back versus points-and-miles credit cards 

Main perks and benefits

This is a cash-back credit card that charges no annual fee, so you won’t get any premium benefits like lounge access or travel credits. The card’s main asset is its rewards structure, which we’ll dig into later. Otherwise, the card offers standard credit card protections and benefits, including account alerts, a way to check your FICO score for free and fraud protection.

Earning

For a card with no annual fee, this card offers a generous rewards structure — especially for Bank of America customers who qualify for the Preferred Rewards program.

Cardholders earn 3% cash back on one of the following categories of their choosing: gas, online shopping, dining, travel, drug stores or home improvement/furnishings. You’ll also earn 2% cash back at grocery stores and wholesale clubs. Note that there’s a $2,500 cap on combined 3% and 2% cash-back purchases each quarter. Beyond that, you’ll earn 1% cash back.

(Photo by filadendron/Getty Images)
There are plenty of great categories you can choose from with the BoA Cash Rewards card, including online shopping and other popular spending categories right now. (Photo by filadendron/Getty Images)

 

All of the bonus categories are fairly broad. Travel includes traditional travel expenses like airfare and hotels, plus transit, home rentals on Airbnb, tourist attractions and more. Dining includes both dine-in and takeout. The drug store category includes anything bought at a drug store, from prescription purchases to gift cards to batteries. The home improvement category counts hardware store purchases and services like landscaping, plumbing, electrical and more.

Gas includes gas stations and marinas, so you can earn money filling up your car or your boat (perfect for anyone planning a domestic lake getaway as opposed to an international trip this year). Online shopping is also a broad category that’s easy to use and very relevant with everyone staying home.

Bank of America allows you to change your selected 3% cash-back category each month, so you can easily customize this rewards structure to fit your needs. Going on a trip this winter? Select travel as your bonus category for the month you book your trip. Plan on replacing some of the plumbing in your bathroom this fall? Pick home services that month to earn bonus rewards on the service. Have kids who are prone to getting the flu? Choose drug stores to earn cash back on the cost of flu shots and prescriptions during flu season.

Maximizing cash back with Preferred Rewards

If you are eligible to enroll in Bank of America Preferred Rewards, this card could earn even more cash back. You’ll need an eligible Bank of America personal checking account and a three-month average combined balance of $20,000 or more in a Bank of America account and/or Merrill investment accounts to enroll. There are three tiers you can fall into based on your three-month average account balance.

Spending categories Regular cardholder Tier 1 – Gold ($20,000 – $49,999) Tier 2 – Platinum ($50,000 – $99,999) Tier 3 – Platinum Honors ($100,000+)
3% bonus category 3% cash back 3.75% cash back 4.5% cash back 5.25% cash back
2% bonus categories 2% cash back 2.5% cash back 3% cash back 3.5% cash back
Other spending 1% cash back 1.25% cash back 1.5% cash back 1.75% cash back

 

The Preferred Rewards program also offers an interest-rate booster for eligible savings accounts and other banking and investment perks.

If you qualify for Platinum Honors, you can earn up to $131.25 in bonus cash back each quarter. That’s $525 every year for only $10,000 in annual bonus-category spending. Keep in mind, this card doesn’t charge an annual fee, so for those who already qualify for the Preferred Rewards program, you’re essentially getting up to $525 in free bonus cash back annually.

Related reading: Stop ignoring Bank of America’s Preferred Rewards program

Redeeming

Unfortunately, the redemption options for the Bank of America Cash Rewards credit card are lacking. You currently have four options:

  1. Redeem your cash back as a statement credit
  2. Deposit your cash back into an eligible Bank of America checking or savings account or an eligible Merrill account
  3. Redeem as a contribution to a qualifying 529 plan with Merrill
  4. Redeem for a check starting at $25

If you are an existing Bank of America or Merrill customer, you can easily use your cash back to contribute to your accounts. However, if you’re hoping to find added value by redeeming for travel, this isn’t the card for you.

Cash back has a fixed-rate value (1% is worth 1 cent per dollar). Although savvy travelers might find cash back lackluster as a rewards option, beginner travelers or those just looking for a way to save on everyday expenses will enjoy the simplicity of the rewards program. You don’t have to worry about rewards valuations shifting or subpar redemption options. No matter how you plan on redeeming, you’re getting the same value out of cash back.

Which cards compete with the BoA Cash Rewards?

For existing Bank of America customers, other Bank of America credit cards are the most direct competitors of the Bank of America Cash Rewards card. For example, the Bank of America®️ Premium Rewards®️ credit card offers unlimited 2x points on travel and dining and 1.5x points on everyday purchases, plus a higher sign-up bonus and perks, like up to $100 in airline fee credits, Global Entry/TSA PreCheck application fee credit and travel protections. It also carries a $95 annual fee.

The Bank of America® Travel Rewards credit card offers unlimited 1.5x points on all purchases and a higher sign-up bonus. If you’re looking for a card with a bigger welcome bonus or simpler earning structure, these two might be a better fit.

Upon first glance, the BoA Cash Rewards card gets a higher potential return (up to 5.25% cash back with Cash Rewards versus up to 3.5% return with the Premium Rewards and 2.625% with the Travel Rewards), but remember that the Cash Rewards has a $2,500 quarterly cap on bonus category earnings.

While someone who’s only spending around $800 a month will still benefit more from the rewards structure of the Cash Rewards, larger budgets will likely earn more with the Premium or Travel Rewards cards.

For example, if you’re spending $20,000 each year (around $1,667 a month) on travel and/or dining, you’ll end up earning more with the Premium Rewards credit card. That level of spending with the Cash Rewards will earn up to $625 for Platinum Honors members, while Premium Rewards cardholders can earn up to $700 as Platinum Honors members. That’s also not considering the additional perks you get with the Premium Rewards card.

For non-BoA customers, the U.S. Bank Cash+ Visa Signature Card is another competitor. You’ll earn 5% cash back on the first $2,000 you spend on your choice of two categories each quarter, plus unlimited 2% cash back on your choice of grocery store, gas station or restaurant purchases.

The eligible categories change every now and again, but you can see the current list here. The categories aren’t quite as broad, but include a larger variety (such as streaming services and gyms/fitness memberships). If you aren’t eligible for Bank of America Preferred Rewards, this could be a better option for you long-term.

Bottom line

If you qualify for Preferred Rewards through Bank of America, the BoA Cash Rewards card has the potential to offer lucrative rewards for smaller budgets. Frequent travelers and those with larger budgets will probably get more out of one of Bank of America’s more premium cards.

Also, keep in mind that Bank of America cards are best suited for those who use other Bank of America products like their savings and investment accounts. Those who bank elsewhere can find a higher cash-back rate with cards offered by other issuers.

Featured image by John Gribben for The Points Guy

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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