Bank of America Cash Rewards Card Review: Choose Your 3%-5.25% Cash Back Category

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Updated. Bank of America announced some new changes that will take effect January 14th, 2019. Cardholders will be able to choose their 3% cash back category from one of these 6 options: gas, online shopping, dining, travel, drug stores, or home improvement and furnishings. Before it was only gas. You can change your category once each calendar month in-app or online. Do nothing and it will stay the same. Stays the same: The fixed 2% cash back on grocery and wholesale clubs and the limit to $2,500 in combined choice category/grocery store/wholesale club purchases each quarter.

The full review:


The Bank of America Cash Rewards Credit Card is the no-annual-fee “cash back” credit card in the Bank of America line-up. In this review, I’ll cover the basic card features but also focus on a lesser-known opportunity – if you’re a Preferred Rewards client, you can increase that bonus to 25% – 75%. For such “relationship” customers, the bonus can change this card from good to great. Here are the highlights:

  • $200 cash rewards bonus after $500 in purchases in the first 90 days.
  • Earn 1% cash back on every purchase, 2% at grocery stores and wholesale clubs, and 3% on gas (choice category after 1/14/19) up to the first $2,500 in combined grocery/wholesale club/gas purchases each quarter
  • 0% Introductory APR offer. See link for details.
  • Get a 10% customer bonus every time you redeem your cash back into a Bank of America® checking or savings account
  • If you’re a Preferred Rewards client, you can increase that bonus to 25% – 75%. See details below.
  • No annual fee.

Preferred Rewards bonus. The Preferred Rewards program is designed to rewards clients with multiple account 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

Let’s consider the options. Bank of America’s interest rates on cash accounts tend to be lower than highest-available outside banks, so moving cash over to qualify may result in earning less interest on your cash deposits. Merrill Lynch advisory accounts also usually come with management fees. The sweet spot is if you have brokerage assets like stocks, mutual funds, and ETFs. In this case, 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.

I recently moved a little over $100k of brokerage assets (Vanguard funds) over to Merrill Edge to qualify for Platinum Honors. I realize not everyone will have this level of assets to move around, but if you do then it is worth considering. Keep in mind that it will take a while for your “3-month average combined balance” to actually reach the $100k level and officially qualify for Platinum Honors. After that, the 25%-75% rewards bonus on credit card rewards kick in.

If you are opening a new Merrill Edge account, check out the current Merrill Edge brokerage sign-up bonus. As of this writing, it is up to $1,000.

Cash Back Rewards after Preferred Rewards bonus:

Recall that the basic structure is “1/2/3”; you get 1% cash back on every purchase, 2% at grocery stores and wholesale clubs and 3% on gas (choice category after 1/14/19) for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter (1/2/3). Here’s how the bonuses work out:

  • Platinum Honors: 1.75% cash back on every purchase, 3.5% at grocery stores and wholesale clubs, and 5.25% on gas (choice category after 1/14/19) for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.
  • Platinum: 1.5% cash back on every purchase, 3% at grocery stores and wholesale clubs, and 4.5% on gas (choice category after 1/14/19) for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.
  • Gold: 1.25% cash back on every purchase, 2.5% at grocery stores and wholesale clubs, and 3.75% on gas (choice category after 1/14/19) for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter.

Note that the terms state “The Preferred Rewards bonus will replace the customer bonus you may already receive with the card.”, which means that you will lose the 10% bonus for redeeming your cash back into a Bank of America® checking or savings account.

For my personal spending, I like the idea of getting up to 3.5% cash back at Costco, Sam’s Club, and BJs wholesale clubs. Costco only takes Visa while the current application picture indicates a Mastercard (past versions have been Visa). If you have a Mastercard, you could try and call them and request to switch to a Visa version of the card instead of a Mastercard. If the customer service rep says they don’t do that, hang up and call again. Alternatively, you could apply for the Susan G Komen or World Wildlife Fund versions of this card, which do show a Visa.

I also like the idea of getting up to 5.25% cash back on “online shopping” assuming that includes Amazon, although Amazon’s own card already offers 5% back.

This is finally a case where bundling services actually worked out for me. Bank of America has managed to convince me to go from only having a checking account with them to now also having a Merrill Edge brokerage account with 100 free trades per month and a Bank of America credit card.

Not all Bank of America consumer credit cards qualify for Preferred Rewards. Another card that does qualify is the Bank of America Travel Rewards card. The Travel Rewards credit card is actually a better everyday card in my opinion (assuming you have at least some travel purchases to offset), but this card exceeds that card in the special categories.

Bottom line. The Bank of America Cash Rewards Credit Card is an “okay” cash back rewards card with a 1/2/3 structure, but turns into an “excellent” rewards card if you can take full advantage of their Preferred Rewards program. If you transfer $100,000 of existing brokerage assets over to Merrill Edge, you can qualify for the highest Platinum Honors tier. This won’t be a good option for everyone, but something to be aware of if you can swing it.



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Comments

  1. I have been a Preferred Rewards customer for a couple of years now.

    Recently, when I was logged into my account, the cash rewards card was offered with $150 bonus. The bonus is now showing as a pending cash reward that is available for my 75% bonus. So, it looks like I will get $262.50 for opening the account.

    In addition, as a Preferred Rewards customer B of A waives the $47 annual fee on my safety deposit box. The checking is free too. I like the bill pay system, because it lets me pay from either my B of A checking or from the credit union account that is linked and keep only a small balance in the B of A checking. This is for most of the payees, but not all.

    Also, once I had opened the Merrill Edge account and got the first $600, I requested that they pay me the same as Fidelity was offering for adding additional funds and they agreed. I have also done this with Schwab and found they are very willing to match the offers that are being made by other brokerage companies.

    Overall, I have been happy with B of A / Merrill Edge, but I am only there because of the rewards.

    Also,

  2. Thanks for the tip about the safe deposit box. I will look into that. I could use one for birth certificates, etc., particularly if it’s free.

  3. Is there really any difference between this card and the travel rewards card (other than the travel card only reimbursing for travel expenses)? Discounting the initial sign up bonus, I suppose this one imposes limits based on the categories but other than that it seems you could redeem the same level of cash benefits for anything (and not just travel expenses).

    • Yes, I think the cards are pretty different, look carefully at the percentages and compare with your spending patterns. The Cash Rewards card on the Platinum Honors level gets you 1.75% cash back on every purchase, 3.5% at grocery stores, and 5.25% on gas for the first $1,500 in combined grocery/gas purchases each quarter (in the form of cash back). The Travel Rewards card on the Platinum Honors level gets you 2.625% back, if applied towards travel.

  4. Merrill Edge tells me they don’t have a list of their NTF mutual funds – I should open an account if I want to see this information. Can anyone speak to their selection of NTF mutual funds?

    • Here’s what it says in my account: “Our clients have exclusive access to 600+ load-waived funds from 31 fund families, including:

      Aberdeen
      Blackrock
      John Hancock
      Nuveen
      Ridgeworth
      Touchstone”

      If you want to know about a specific company, ask in a comment and I’ll check for you.

    • Some of their NTF funds are the same, except they have higher expense ratios. Overall though, there are plenty of Vanguard alternatives now which are just as good, if not better and/or cheaper. So, for me, Merrill Edge + Travel Rewards card is the best bet, and if you have enough assets you can negotiate special rates for options trading, etc, plus get a bunch of money for bringing assets over.

      I have a checking account at a smaller more personal bank for everyday purposes and because I like it when my banker can do things for me via email (send wires, stop checks, etc.).

  5. Fern Lin-Healy says:

    Does the card provide other benefits such as extended warranties, purchase protection, etc?

    • I signed up for this card solely for their ShopSafe program. It allows you to generate virtual card numbers to use with online shopping.

  6. Jonathan – I think you’ve made a mistake in your interpretation of the Preferred Rewards – you only get them if you deposit the cash back into a BAC account – otherwise, you get the standard 3/2/1% cash back.

    • You do need a eligible Bank of America® personal checking account to qualify for Preferred Rewards program along with the asset amount which can be spread amongst different types of accounts at BofA and Merrill. However, it isn’t that hard to keep very minimal amounts in a checking account, so I don’t really see that as a difficult requirement to maintain if you already have $20k in total assets across BofA.

      • I am referring to this paragraph:

        “Note that the terms state “The Preferred Rewards bonus will replace the customer bonus you may already receive with the card.”, which I interpret to mean that you will lose the 10% bonus for redeeming your cash back into a Bank of America® checking or savings account.”

        My understanding is that the Preferred Rewards tiers supersede the 10% bonus with the bonus percents you have listed but ONLY when you deposit the money into a BAC account. If you get a paper rewards check, even with Preferred Rewards tiers, you will ONLY get 3/2/1%. In other words, if you don’t deposit your rewards earnings back into an eligible BAC account, you don’t get any bonus rewards at all (even if you have, say, $100k on deposit with the Bank). My interpretation could be wrong, but I thought I’d bring it up just in case it isn’t.

        I hope that makes more sense than my original post.

  7. Do you know of any other Bank or Brokerage that has anything comparable to the B of A Preferred Rewards program and has a comparable service offering?

    The only thing I find missing in the B of A package is a savings or money market account with good rates.

    • Michael Piotter says:

      At one time, Wells Fargo had a competing product with it’s PMA relationship banking. They’ve slowly whittled away any value though. The free stock trades were a big deal at the time. No credit card bonuses, no competitive interest rates. Wells Fargo itself is scary in the amount of fees they charge though. I got dinged once for transfer money ACH between WF and another bank (no one else charges for this!).

    • I use MINT + GSY to “manually sweep” my savings into. They also have some funds you can get higher rates into depending on your situation. https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/ICCRateSheet.pdf

      • Thanks for reply. I have used MINT at Merrill Edge as an alternative. I have also used PVOXX, MCSXX and FFTXX, but I have to call in to move money in or out of these funds. I understand an online option to move money in these funds is coming. In 2016, when I posted, I was unaware that a money market sweep fund was available. My account was changed to sweep into a money market account and this was an improvement. However, Merrill Edge is stopping the money market sweep option. My solution is to keep no cash at ME. I have set up a daily sweep of interest and dividends to my credit union and I moved the IRAs to Vanguard and Fidelity. My wife got a cash bonus for moving her IRA to Fidelity.

  8. My financial institution offers a credit card with an interest rate of 7%. Would it be wise to apply for a card like this? I do not have a credit card yet and need to get one soon. I was looking at the BankAmericard Cash Rewards credit card due to its rewards.

  9. Can anyone who has recently signed up for preferred rewards tell me if the 50% or 75% bonus applies to new card bonuses?

    • It does. See my first post above.

    • Yes, the preferred rewards bonus applied on the new card sign-up bonus for me as well. I signed up within the last 12 months.

      • The two cards work differently wrt the bonus though. The cash rewards matters which preferred level you are at when you redeem, the travel matters which level when it is earned. So if you are moving 100k now you’ll be ok earning the bonus on cash rewards so long as you wait to redeem, but on travel you want to wait till you qualify as platinum honors before meeting the qualifications for the bonus. It’s easiest to move the money, wait till you get platinum honors, then apply for the credit cards.

  10. Guest Reader says:

    Jonathan. Do you know if you will incur Sell fee if you are a platinum honors member? From their website it looks like

    Sell trades are subject to a transaction fee of between $0.01 and $0.03 per $1,000 of principal..

    I am a little confused if there are fee even if you qualify for free trades?

    Also it has been approximately 5 months from this post. Any updates with experience. I was reading some reviews of Merrill and they are not good so just a little hesitant.

    • Yes, you’ll still have to pay that fee. If you sell $10,000 of shares, they will ding you about 20 cents. Nearly every broker charges that $0.01 to $0.03 per $1,000 of principal, as it is intended to cover what is sometimes referred to as a “regulatory fee” or “Section 31 Fee.”

      https://www.sec.gov/answers/sec31.htm

      Merrill Edge is not the same as Merrill Lynch wealth management. Merrill Edge is a self-directed brokerage account, and it has worked just fine for me.

    • Trades are free at that level. The few cent fee is for regulatory items that are small. Same happens at other brokerages too.

      I’ve personally had a good overall experience with BofA/Merrill since signing up this summer. It takes 3 long months to reach say Platinum Honors. Just getting started with cards that make the relationship worthwhile, CSRs didn’t make it seem that getting status would help with new card accounts, but YMMV. That’d be the only gripe I’ve had.

    • I opened a couple of ME accounts, transferring over securities from Scottrade. While I still have and use the account, I would not say that it has worked fine for me. Primarily my issues are the inability to easily link bank accounts and transfer money into the ME accounts, and the treatment of mutual funds (I cannot specify individual lots to be sold on the website, I cannot sell fractional shares of mutual fund on the website, and the cost basis for mutual funds transferred in is all jumbled, so that ME can categorize lot sizes into whole numbers whenever possible). These are all things I can work around, although I ended up not using ME as my primary brokerage as I had intended, and I might not have given these things a second thought if ME had been my first brokerage experience. But if your expectations are anything like what mine were, you may be disappointed.

  11. Also BoA Premium Rewards Credit Card has 1.5% cashback, so with Platinum Honors that would make “basic” chashback 2.62%. Granted there is $95 annual fee, so you would need to be charging over $15K in regular purchases before it makes more sense than Citi’s 2% cashback card, but since we are talking about people who can bring over $100K to BoA in order to get to Platinum Honors level, $15K threshold is not unheard of.

    • That’s true, but as long as you have enough travel purchases to offset, the Travel Rewards cards offers the same 2.62% back on all purchases with no annual fee. If you are willing to carry two cards, add this one for the special 3% to 5.25% categories (and up to 3.5% back at Costco/Sams/BJs).

  12. I have the BOA Premium Rewards card with Platinum Honors. I should be using this at Costco, with or without Executive membership? Without looking into it, I always assumed that the Citi card they issue was the best to use but that is not the case if you have Platinum Honors? You still get Executive 2% regardless of payment method?

    • You get the 2% Executive Reward completely independent of what form of payment you use each time.

      The BofA Premium Rewards card is different and does not have a special bonus category for wholesale clubs. With Plat Honors, you’ll get the standard 1.5% + 75% bonus = 2.62% cash back at wholesale clubs.

      This BofA Cash Rewards does have a special bonus category for wholesale clubs. With Plat Honors, you’ll get the 2% + 75% bonus = 3.5% cash back at wholesale clubs.

      • Yes, sounds like this is the best cashback on gas out there. Been also looking what to use for groceries after the $6K limit runs out on 6% AMEX Blue Cash card. This might be it…

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