Bank of America Premium Rewards Card Review – 50,000 Bonus Points

bofa_premium225After some sneak peaks and rumors, the Bank of America® Premium Rewards® Credit Card is now officially live. This card is a new addition to Bank of America’s rewards card line-up, and the question will be if the added benefits outweigh the $95 annual fee. This card also participates in the Preferred Rewards program, which gives you better rewards if you give BofA more of your business. Here are the highlights:

  • 50,000 point sign-up bonus ($500 value) after making $3,000 in purchases in first 90 days of account opening.
  • Earn 2 points per dollar spent on travel and dining purchases.
  • Earn 1.5 points for each dollar spent on all other purchases.
  • Reward points can increase by 25 to 75 percent on each purchase for clients enrolled in the bank’s Preferred Rewards program.
  • Up to $100 annual airline incidental statement credit for qualifying travel purchases such as seat upgrades, baggage fees, in-flight services and airport lounge fees.
  • Up to $100 airport security statement credit towards TSA-Precheck or Global Entry Application fee, every four years.
  • No foreign transaction fees.
  • $95 annual fee.
  • No limit to earning points, and points don’t expire.

Tips on qualifying for Preferred Rewards. The Preferred Rewards program is designed to rewards clients with multiple accounts and higher assets located at Bank of America banking, Merrill Edge® online brokerage, and Merrill Lynch® investment accounts. Here is a partial table taken from their comparison chart (click to enlarge):

bofa_pref1

Bank of America’s interest rates on cash accounts tend to be much lower than highest-available outside banks, so moving cash over to qualify may reduce your interest earnings. Pass. Merrill Lynch advisory accounts also usually come with management fees. Pass. However, if you have brokerage assets like mutual funds and ETFs, moving them over to Merrill Edge may actually reduce your costs because at the Platinum and Platinum Plus levels they will actually give you 30 to 100 free online stock trades every month.

A couple years ago, I did a partial transfer of a little over $100k of brokerage assets (Vanguard funds) over to Merrill Edge to qualify for Platinum Honors. (You could also do $20k to qualify for Gold, or $50k to qualify for Platinum.) I should mention it may take a while for your “3-month average combined balance” to actually reach the $100k level and officially qualify for Platinum Honors. Only after that will the 75% rewards bonus on credit card rewards kick in.

(Side note: Stack this offer with their Merrill Edge brokerage sign-up bonus.)

I realize not everyone will have this level of assets to move around, but if you do then it is worth considering. Both Platinum and Platinum Honors levels allow you to reach tiers that effectively give you over 2% cash back on all purchases. Here’s are the cash back rates after the Preferred Rewards bonuses:

  • Platinum Honors (75% bonus): 3.5% cash back on travel and dining, 2.625% cash back on all other purchases.
  • Platinum (50% bonus): 3% cash back on travel and dining, 2.25% cash back on all other purchases.
  • Gold (25% bonus): 2.5% cash back on travel and dining, 1.875% cash back on all other purchases.

Rewards comparison. This card has a more flexible rewards structure than their BankAmericard Travel Rewards card in that the points don’t have to offset a travel purchase. You can redeem at a flat 1 point = 1 cent value towards a statement credit or deposit into eligible Bank of America or Merrill Lynch® accounts (including deposit, investment or 529 accounts).

Getting a flat 2.625% (Platinum Honors) or 2.25% cash back (Platinum) on all purchases is a very solid base earning level. In terms of the competition, there are now multiple cash back cards in the 2% cash back range such as the Citi Double Cash Card with no annual fee. That means I wouldn’t bother with this card for everyday purchases if I wasn’t Platinum or Platinum Honors.

Also note that you can also earn similar levels of everything rewards (minus the travel/dining bonus category) but restricted to offsetting a travel-related purchase with the BankAmericard Travel Rewards card – except with no annual fee. The question then reverts back to if you can offset that $95 annual fee with the $100 annual incidental airline credit good towards seat upgrades, baggage fees, in-flight services and airport lounge fees. (Do I pay that much in baggage fees every year? Sadly I did this year.) If you can get max value out of that airline incidental credit every year, then that removes the major disadvantage when compared to the BofA Travel Rewards card. You can then enjoy the added perks like the $500 value sign-up bonus, $100 Global Entry/TSA PreCheck credit once every 4 years, and the higher rewards on travel/dining bonus.

Bottom line. The Bank of America Premium Rewards Credit Card is rather average in basic form, but is elevated into an excellent card if you can qualify for the Platinum or Platinum Honors tiers of their Preferred Rewards program for up to 3.5% cash back on travel and dining and 2.625% cash back on all other purchases. The $500 initial sign-up bonus is nice, but note the the $95 annual fee is not waived for the first year. Consider your ability to use up the $100 annual incidental airline credit.

Comments

  1. To get the $1000 Merill bonus (your side note), I assume you apply for the card first, then use that link to transfer money in?

    • I don’t think it matters what promo you apply for first, they are two separate promotions for the credit card and Edge brokerage. You would have to keep your brokerage assets there long enough to qualify for the Preferred Rewards status.

  2. I have shares in a mutual fund (Massachusetts Investors Trust) that I bought as a teenager. I have reinvested capital gains for nearly 50 years, and my position is worth about $80K now. I’ve never sold this fund principally because I don’t know my basis and don’t want to work that hard on taxes. I’ve forever kept them with MFS (the parent group) although they have repeatedly pestered me for the name of my “financial adviser.”

    Question: Can I move this $80K dinosaur to BofA for purposes of the $100K “Platinum Honors” requirement? And if so–out of curiosity–what’s in it for BofA?

    • Honestly, I would just call up Merrill Edge and ask if it can be transferred over in-kind internally. If not, I’m still sure you could transfer it over as you can transfer holdings from any brokerage.

      What’s in it for BofA? They want you have you in their ecosystem. If you do your banking, credit cards, mortgage, and brokerage accounts through BofA, they can cross-sell different products in the future.

  3. My company has our 401k accounts with Merrill. Do you know if they qualify towards account minimums?

  4. $1k bonus offer expired on 12/31/16

    • Oops, thanks for pointing that out. The best alternative offer I could find is up to $600 or IRA and CMA accounts. I believe CMA just means a regular taxable brokerage account (with cash management features).

  5. I’ve been waiting for this news for a while after seeing the initial WSJ article.The card seems weak.

    Costco (no annual fee):
    3% restaurants & travel

    BOA Cash Rewards (no annual fee):
    5.25% gas, 3.5% grocery & wholesale (Costco)
    Rewards cap of $2.5k/quarter defeated with multiple cards.

    BOA Travel Rewards (no annual fee):
    2.625% on everything else

    *** if you spend a ton on travel & dining then ***
    BOA Premium Rewards ($95 annual fee):
    3.5% restaurants & travel

    Break even dining between Costco & BOA Premium Rewards = 95/0.005 = $19k.

    • Yes, that’s why I mention the $100 annual incidental airline credit. If you can take advantage of that, then this card effectively has no annual fee, and your break-even calculation is unnecessary.

    • When you call the card weak, you are not giving consideration to the sign up bonus and $100 airline credit. I like to check bags, so the $100 covers the the annual fee of me. That leaves a tax free $500 for me. However, since I am already at the 75% bonus level, this could mean a bonus of $875 tax free. On the cash rewards card I got the 75% on the basic sign up bonus. On the travel card I did not get the 75% on the basic sign up bonus. Does anyone know if the bonus levels will apply to the sign up bonus?

  6. Can you get Platinum Honors Level by bringing in $100K in IRA assets?

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