Credit Card Review: Bank of America Premium Rewards
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Official Application Link: Bank of America Premium Rewards Credit Card
The credit card space has been on fire in the past year, especially with the launch of the Chase Sapphire Reserve in 2016. We’ve seen a number of new products emerge in 2017, now including the new Bank of America Premium Rewards card, which is one of the best mid-tier entrants in the market that I’ve seen in quite a while.
This card isn’t like other products that have $450 annual fees and a ton of perks; this card has a modest $95 annual fee and a more modest selection of benefits. But it offers great flexibility in redeeming points and yields extraordinary earn rates if you can maximize BofA’s Preferred Banking Rewards program.
Who Is This Card For?
This card has wide appeal to both points fans and credit card novices. Now it might not have the most lucrative points or numerous transfers partners, but what it does offer is flexibility.
I’m thinking of it as a stress-free travel card, since points are worth 1 cent apiece no matter what you redeem them for — you don’t have to worry about getting the maximum value out of every point, which can sometimes be time consuming and frustrating. If you like the idea of redeeming your points as a statement credit against big purchases that aren’t covered by points — like new luggage or a TV — then this would be the card to get. You can redeem points for any purchase, whether it’s a flight, a new car or an over-the-top dinner. The points function essentially like cash.
The Premium Rewards Card is also a strong option for those who tend to spend in broad bonus categories like travel and dining (2x and up with this card), but who also want solid rewards (1.5x and up) for non-category bonus spend.
Where things get interesting is that the earn is even better if you’re already a Bank of America customer and can maximize the Preferred Rewards Program (more on that later).
It’s also a great choice for semi-frequent travelers since it comes with valuable perks like a $100 Global Entry/TSA PreCheck credit, a $100 airline credit, trip delay/cancellation insurance, baggage loss/delay insurance and no foreign transaction fees, so you won’t be hit with any surprise charges when using your card abroad.
With this card, you’ll receive 50,000 bonus points after spending $3,000 in the first 90 days of account opening. These points have a fixed value of 1 cent each, meaning that 50,000 points are worth $500.
When you consider that BofA is essentially paying you $5 every year (after you redeem the $100 airline credit) to have this card, you’re basically getting $500 for free just for signing up and meeting the minimum spend! Use the sign up bonus to treat yourself to something extravagant, like a helicopter or private jet ride on Blade.
The card doesn’t earn traditional points or miles that can be transferred and redeemed with travel partners, but rather acts more like a cash-back card with huge earning potential.
I honestly never thought I’d be thinking about cash back, but as airlines have trimmed away the value of miles and severely limited saver availability (I’m looking at you American and Delta), the idea seems more appealing.
And although we value most airline miles over 1 cent each, that’s mainly based on being able to find premium cabin saver seats. But it’s becoming harder and harder to get good value out of points and miles and that’s where this card can come in handy. As I mentioned earlier, points are flexible with the Premium Rewards card; you can use them on anything — airlines, gym, etc. — essentially anywhere that accepts Visa. Your points can go toward paying for those purchases (as a statement credit) and the credit posts automatically.
Before we break down the earn for the Premium Rewards card, it’s important to understand BofA’s Preferred Rewards program. Those who hold considerable assets in a BofA or Merrill Lynch account — including retirement or investment accounts — are eligible for increased rewards when spending on the Premium Rewards Card. To enroll in BofA Preferred Rewards you’ll need:
An eligible Bank of America personal checking account AND a 3-month average combined balance of $20,000 or more in a Bank of America account and/or Merrill Edge or Merrill Lynch investment accounts.
There are three tiers in Preferred Rewards, and your tier is based on how much money you have in your accounts. This will determine your earning with the Premium Rewards card.
|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|
At the base level of 2% back on travel and dining and 1.5% back on everything else, the card is pretty standard. It’s good, but the Citi Double Cash Card and Fidelity Rewards Visa Signature Card are cash-back cards and have no annual fees, though those cards don’t come with any perks.
But the numbers get pretty spectacular when you’re able to get 2.625% back on everyday spend and 3.5% back if you meet the highest banking threshold. That said, I’ll still probably put most of my travel and dining spend on my Sapphire Reserve because I value Ultimate Rewards points at 2.2 cents — meaning I get 6.6% back (toward travel per dollar spent). But 3.5% back on travel and dining and 2.625% on everything else for those who don’t value travel as much as I do — and want flexibility when redeeming points — is quite strong.
The way I see it is that if you can maximize Preferred Rewards, you’re essentially getting a no-annual-fee card (after using the airline credit) that gives you 3.5x on travel and dining and 2.625x on everything else. If you’re looking for a straight cash-back card, no other card comes close to that. The moment I heard of this card, I immediately moved $100,000 into a Merrill Lynch investment account so I could start qualifying for Platinum Honors. BofA also allows the option to roll over a 401k into a Merrill Lynch retirement account, so that this could be an easy way to qualify for Preferred Rewards.
Another thing I like about this card is that it’s zero-stress and consumes very little time. You don’t need to jump through hoops to find award availability and you don’t have to go to a specific portal if you want to use your points to pay for your gym. Since points are worth the same no matter what you redeem for, you’re not penalized for redeeming for cash back. You just redeem for whatever you want.
There a few ways to redeem points:
- Cash back — You can receive cash back as a statement credit or deposit it into an eligible BofA checking or savings, Merrill Lynch or 529 college savings account
- Travel Purchases — You can book flights directly through the BofA travel portal. This is a good way to redeem points because you’ll still be eligible to earn award miles and elite credits by flying on a paid ticket. Although personally I’d recommend buying directly from the carrier because sometimes when buying through a travel portal you’ll get a lower fare class.
- Gift Cards — A final option allows for converting points into gift cards at popular merchants like Amazon, Whole Foods and Starbucks. I wouldn’t plan on going this route since it’d be smarter to just purchase the items and redeem your points as a statement credit in case you have to return the item.
I especially love that you can convert points directly into cash that can go straight into a 529 college savings account. I’m thinking that I’ll convert the points from my sign-up bonus and deposit them directly into 529 accounts for my nieces and nephews. From there, I plan on using my points as statement credits against Soul Cycle classes, which I’m completely addicted to.
And if you’re solely focused on travel rewards, this card can cover travel expenses that you can’t redeem miles for, like seaplane rides in the Maldives or offsetting fuel surcharges on an award ticket.
Originally when I heard that points were worth only 1 cent each, I was a bit disappointed. But it’s honestly nice that I don’t have to jump through hoops to find award availability and I don’t have to feel bad about redeeming these points for max value. I can use them whenever and for whatever I want. As I mentioned earlier, you’re probably better off using this card than many airline cards since the value of miles can fluctuate so much. And it’s incredibly important to have a diverse portfolio of points and miles, as the value of them can easily change overnight.
On top of the huge earn and flexible rewards, the Premium Rewards card comes loaded with perks, a lot more than basically any other mid-tier card out there. I’ll detail my favorite perks and their value:
$100 Airline Incidental Credit: This credit works like the Amex airline fee credit in that you can only use it for purchases such as seat upgrades, baggage fees, in-flight services and lounge fees, not airfare. 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. Unfortunately, it’s not as flexible as the Sapphire Reserve’s travel credit or the Citi Prestige’s Air Travel credit, but it’s still a great benefit for someone who travels a few times a year. It only works on certain domestic airlines but it’s processed automatically, so you don’t have to call in and apply it to a certain purchase. Hopefully you’ll be able to purchase airline gift cards like you can with the Amex Platinum, but that’s TBD.
Global Entry: I love having Global Entry — it’s saved me from standing in countless hours of security and customs lines. Premium Rewards cardmembers get a $100 credit (every four years) that can be applied toward purchasing Global Entry or TSA PreCheck. It’s surprising that this card offers a Global Entry credit, as that’s usually only offered by top-tier rewards cards with higher annual fees. And if you’re already part of the program you can still use the credit for a friend or family member’s application.
Trip Insurance: It’s always important to have trip insurance since you never know when your travel plans will go awry. This card provides reimbursement of up to $5,000 per person, per trip, for the unused, prepaid, non-refundable travel expenses including passenger fares, tours and hotels if you have to cancel due to a covered reason. And if your flight is delayed for more than 12 hours, you’re eligible for reimbursement of $500 in expenses per ticket.
Baggage Delay/Loss Insurance: Similar to trip insurance, you’ll be eligible for protection if your baggage is lost, stolen or damaged. This provides up to $100 per day (up to five days) when your bag is delayed for more than six hours. If your luggage is stolen or lost by a travel provider, you’ll be eligible for reimbursement for the contents of the bag.
Purchase Protection: I’ve used purchased protection many times and it’s saved me thousands of dollars over the last year — Amex paid me $1,400 for a broken watch and my Sapphire Reserve reimbursed me $2,600 for a painting that was damaged in transit. You’ll get similar protection with the Premium Rewards card, which will repair, replace or reimburse you up to $10,000 for lost or damaged items purchased on the card. And if you want to return an item within 90 days of purchase but the retailer won’t accept the return, you can submit your receipt and be reimbursed up to $250 (up to $1,000 annually).
Rental Car Insurance: Lastly, this card will give you secondary coverage when renting a car — meaning it will kick in only after you’ve filed a claim with your personal insurance. While not as good as many of Chase’s cards that offer primary coverage, it’s pretty good for a no-annual fee card (after maximizing the airline credit).
Which Cards Compete With Premium Rewards?
The Premium Rewards Card comes in to the credit card space as a mid-tier option. It falls somewhere between a no-annual-fee card like the Chase Freedom Unlimited and a high-end card like the Citi Prestige or Amex Platinum. Although BofA points might not be worth as much as Citi ThankYou points or Chase Ultimate Rewards points, for those who value flexibility when redeeming (and might not be trying to redeem for premium-cabin award seats), the Premium Rewards card is tough to beat since it has such a high earn for cardholders who are members of the BofA Preferred Rewards program. Additionally, no other mid-tier card offers a Global Entry credit and airline incidental credit.
It’s similar to other cards in regards to its sign-up bonus and lack of foreign transaction fees. Here’s a comparative look at three competitors.
|Card Features||Bank of America
|Chase Sapphire Preferred||Citi ThankYou Premier Card
|Sign-Up Bonus||50,000 points||50,000 points||50,000 points|
|Global Entry Credit||$100||N/A||N/A|
|Travel earnings||2x — 3.5x points||2x points||3x points|
|Dining earnings||2x — 3.5x points||2x points||2x points|
|Other purchases||1.5x — 2.625x points||1x points||1x points|
In general, this card is about diversifying your stock of points and using them for the purchases that normal airline miles or credit card points can’t cover. It’s great if you want to use your points to splurge on a crazy watch or piece of jewelry. Or you can be generous and use the points to better your family.
It’s also an interesting option for small business owners — I know a lot of doctors and executives, and at a certain point there is mileage overload where they have too many Amex points and physically can’t redeem for travel (because that is the best way to redeem MR points). So if you own your own business, this card can offer 2.625% back on all of your spend and 3.5% back on all travel and dining, which you can easily redeem for cold hard cash.
And for those who have been eyeing a straight-up cash-back card, this could be your best option. Simply put, it’ll be improving your bottom line — either for you personally or for your business. You don’t have to waste time figuring out how to get the most value out of your points, as the stress-free redemptions make this an easy card to manage.
BofA is obviously telling customers that they will be rewarded with its Preferred Rewards program if they move their assets to BofA. On top of the earning and redeeming possibilities, it comes with a solid sign-up bonus and some pretty great perks, which are worth far more than the card’s annual fee. I’m excited to gain status with Preferred Rewards Banking and add the BofA Premium Rewards Card to my wallet.
What are your thoughts on this new rewards card?
This brand new card from Bank of America gets really interesting if you have a BofA checking, savings or investment account. Depending on the value of your combined accounts you can potentially get as much as 3.5x on travel/dining and 2.625x on other purchases making it the richest consumer banking bonus out there.
- Receive 50,000 bonus points- a $500 value – after you make at least $3,000 in purchases in the first 90 days of account opening.
- Earn unlimited 2 points for every $1 spent on travel and dining purchases and unlimited 1.5 points per $1 spent on all other purchases
- If you're a Bank of America Preferred Rewards client, you can get a 25%-75% rewards bonus on every purchase.
- No limit to the points you can earn and your points don't expire
- Flexibility to redeem for a statement credit, deposit into eligible Bank of America® or Merrill Lynch® accounts like checking, savings, and 529, for gift cards or use at the Bank of America Travel Center.
- Get up to $200 in combined airline incidental and airport expedited screening statement credits + valuable travel insurance protections
- No Foreign Transaction Fees
- Low $95 annual fee