With airlines having largely devalued their frequent flyer programs, there’s more value than ever before in getting a cash back card. After all, a cash back card gets you money that you can spend on anything, including travel.
The Bank of America® Premium Rewards® credit card has the potential to be the single most lucrative cash back credit card out there for everyday spending, as you can earn up to 2.625% cash back on all purchases. That’s virtually unheard of for other cards.
Here’s what you need to know about this card (and make sure you read until the section about the Preferred Rewards Program, which is where this card goes from ordinary to extraordinary).
In this post:
Bank of America® Premium Rewards® credit card
With the Bank of America® Premium Rewards® credit card receive a welcome bonus of 50,000 bonus points after spending $3,000 within the first 3 months. Points on this card can be redeemed for one cent each, giving you a bonus of $500.
Below we will take a look at the restrictions on applying for this card, the annual fee, the rewards structure, and more.
24 Month Application Rule
It’s worth noting upfront that Bank of America has a 24-month rule for many new applications. In the case of the Premium Rewards card, the application notes:
This Premium Rewards card will not be available to you if you currently have or have had a Premium Rewards card in the preceding 24 month period.
If you already have this card, you likely won’t be eligible for a second version of this particular card.
Annual Fee
The Bank of America Premium Rewards Card has a $95 annual fee that isn’t waived the first year, so the annual fee is roughly in line with cards like the Chase Sapphire Preferred® Card and Citi Premier® Card (review).
Rewards Structure
The Bank of America Premium Rewards Card offers 2x points on travel and dining, and 1.5x points on all other purchases. Since points can be redeemed for one cent each, that means the card offers 1.5-2% cash back.
On the surface that’s not very good, since the Citi® Double Cash Card offers 1% cash back on every purchase, plus an additional 1% cash back when you pay for those purchases (in the form of ThankYou points).
But there’s a secret weapon to this card.
This card offers bonus points on travel purchases
Card Perks
This card offers two big perks that can help cover the annual fee, and then some. Specifically, the Bank of America Premium Rewards Card offers:
- A TSA PreCheck or Global Entry fee credit up to once every four years
- A $100 airline incidental statement credit annually for qualifying purchases
- No foreign transaction fees
- Chip & signature technology
Airline Incidental Statement Credit
As you can see, the $100 airline incidental credit alone is potentially worth more than the $95 annual fee, so you could come out ahead on that alone. What qualifies for the Premium Rewards Card airline fee?
They include the following purchases made on domestic-originated flights on certain US domestic airlines:
preferred seating upgrades, ticket change/cancellation fees, checked baggage fees, in-flight entertainment, onboard food and beverage charges, and airport lounge fees affiliated with eligible airline carriers
Meanwhile, the terms state that the following don’t qualify:
airline ticket purchases, mileage point purchases, mileage point transfer fees, gift cards, duty-free purchases, award tickets and fees incurred with airline alliance partners do not qualify
You have to use your card to pay eligible incidental fee transactions, and statement credits will post to your account within seven days. There’s no registration or airline designation requirement.
Use your airline fee credit to purchase a lounge day pass
Redeeming Points
Points earned on the Bank of America Premium Rewards Card can be redeemed for one cent each, and you can redeem when your points balance is 2,500 or higher. You can choose whether you want to redeem your points as:
- A statement credit
- An electronic deposit into a Bank of America checking or savings account
- A contribution to an eligible Cash Cash Management Account with Merrill Wealth Management or Merrill, or College 529 savings account held at Merrill
Points on the card also don’t expire, as long as the account remains in good standing.
Use cash back for purchases you couldn’t otherwise redeem points for
Premium Rewards points can be easily redeemed online by logging in to your BofA account and selecting the “Rewards” tab, or you can call 800.434.8313 and select option 2 (Mon-Fri 9 a.m.-9 p.m. ET).
The Bank of America Preferred Rewards Program
This is where the Bank of America Premium Rewards Card goes from unremarkable to potentially being in a league of its own. As mentioned above, ordinarily this card earns rewards worth 1.5-2% back, though you can do significantly better than that in conjunction with this program, making this a best-in-class card.
Preferred Rewards Program Tiers & Bonuses
Bank of America has the Preferred Rewards program, which has tiers based on your combined balance with Bank of America. Here are the tiers, the balances required to earn them, and the bonus points you earn on your credit card rewards for each tier:
Gold | Platinum | Platinum Honors | |
|---|---|---|---|
Required 3-month average combined balance | $20K to < $50K | $50K to < $100K | $100K + |
Rewards bonus on eligible BofA credit cards | 25% | 50% | 75% |
Effective category bonus | • 2.5% on dining and travel • 1.875% on non-bonused spend | • 3% on dining and travel • 2.25% on non-bonused spend | • 3.5% on dining and travel • 2.625% on non-bonused spend |
So your banking relationship with Bank of America determines how much of a rewards bonus you get on your credit card.
Put another way, if you have the Bank of America Premium Rewards Card and belong to the Platinum Honors tier, you’re earning:
- 3.5% on dining and travel
- 2.625% on non-bonused spending
That’s an unrivaled return on everyday spending!
For example, you could pay your taxes by credit card for a fee of 1.87% and earn 2.625% rewards, which gives you a 0.75% return on your tax payments.
This is extremely generous, as they presumably lose money on you on every transaction.
Preferred Rewards Program Eligible Balance
The balance is determined based on your qualifying Bank of America deposit accounts and/or your qualifying investment accounts with Merrill.
Eligible brokerage accounts include IRAs, so rolling over an old 401k could be an interesting option for some to help meet the higher thresholds (though of course check with your own financial advisors to determine if this makes sense for your situation).
Obviously, these are significant balances, though I’d note that you have some highly flexible options as to what qualifies towards these amounts, including being able to trade your own stocks, for example.
Premium Rewards Card Summary
On the surface, the Bank of America Premium Rewards Card is a pretty average card with a good welcome bonus and decent rewards structure. However, combining it with the Preferred Rewards Program potentially puts this card into a league of its own.
Being able to earn 2.625% on your everyday spending is something that’s not offered by any other credit card. This card most definitely won’t be for everyone, but for those who either have assets with Bank of America or have the option of moving assets to Bank of America, this card is incredible.
I find the business case for this to be fascinating. It’s one thing for a card to have generous bonus categories, but I imagine Bank of America is losing money on every transaction here, and they’re using this card primarily to get people to increase their banking relationship with them.
If you have $100,000+ in assets with Bank of America, or can move them to Bank of America without much of an opportunity cost, I recommend applying for the Bank of America Premium Rewards Card.
Even for others, it can be worth picking up the card for the solid bonus, and seeing how you like it.
Dave, that's completely untrue. You can, and many have, put $100k of assets in Merrill Edge in stocks or bonds, in IRA or taxable accounts, to keep the 2.625% privilege. They charge no commissions like most other brokers.
To get the earnings boost you need to keep at least $100k on deposit with Bank of America which earns 0%. You're much better off putting that money with a bank that pays some interest instead of trying to eek out an additional few percentage points on your spending. For example, Capital One 360 is offering 1.7% APY. That's $1700 per year in interest from having your money sit at a different bank.
It was said the $100 incidental fee works for AA GC. Anyone knows if it also works for Delta GC?
tks.
"Chip & signature technology"
This is a benefit?
Also, with this card you can only get 1% back on points earned (since you cannot transfer to airline reward programs). I transfer to airline programs and get at least 2% back on points/miles earned, so this is not a good option...
Over the last couple of months, I've talked with their bankers. The first one convinced me to take the BankAmericard, which is basically only useful for balance transfers after the initial approval. The second banker told me that I should apply for this Premium Travel Rewards card.
If you want to park $100k at Vanguard, letting Merrill be the custodian, and earning the extra rewards is well worth it.
Did I miss something? This might be a great deal for me who has lots of cash already earning over 2% with B of A affiliated cd’s. But if there is a low cap on earning the 3.5% cash back, what’s the point?
I’d rake it in mostly with dining?
Is there a cap?
For those who move more than 1mm in assets to ML you can get the $2500 offer. That said, their trading platform is awful so really only good to hold long term assets there.
I moved my retirement accounts from Fidelity to ML and got a $2500 bonus
BofA is removing benefits too:
At least the BofA Cash Rewards and Alaska Signature cards are losing travel accident insurance:
“Benefit change
Travel Accident Insurance Effective October 1, 2019, we will no longer offer Common Carrier Travel Accident Insurance on your credit card. You will be able to continue to file claims after October 1, 2019 for occurrences prior to that date, subject to the terms and conditions of coverage.”
Reclycled post alert!!!!!!!!
I guess this repost is to trap readers who fall into
"I will not use Citi cards again, I need to switch to BofA"
This is a peek into the future of miles and points, people - where a wealth relationship or verified spend throughput is required to access top tier benefits.
This post was a waste of my time...completely.
The travel rewards card from Bank of America (no annual fee) also benefits from the 2.625% return on everyday spend - this is what I use for non bonus spend. The premium version doesn’t offer enough incremental value to justify the annual fee (which you can only break even on by using the airline incidental credit of $100 like with Amex cards). I put my dining expenses on more lucrative cards anyway, so non bonus spend is the only real draw for both these cards.
You only have to meet the $100,000 requirement for the Top Tier and then you have status for 15 months...
"You'll maintain your Preferred Rewards tier status for 12 months following your enrollment. If after 12 months you no longer meet the checking account or balance requirement, you'll have a three-month grace period. If you haven't met the checking account requirement after three months, you'll lose your Preferred Rewards benefits. If you haven't met the...
You only have to meet the $100,000 requirement for the Top Tier and then you have status for 15 months...
"You'll maintain your Preferred Rewards tier status for 12 months following your enrollment. If after 12 months you no longer meet the checking account or balance requirement, you'll have a three-month grace period. If you haven't met the checking account requirement after three months, you'll lose your Preferred Rewards benefits. If you haven't met the checking account or balance requirement after three months, depending on your balances you'll either be moved to a lower tier or lose your Preferred Rewards benefits."
The past year I've been using my money from B of A to churn bank bonuses which have been very lucrative. Before October I'll move money back to B of A to keep my status by opening a CD with them.
The Premium Rewards card is great. I just cashed out 100,000 points for $1,000 tax free.
The example of paying taxes with the card is WRONG. Based on how the taxing authority processed the transaction,bit is not run as a purchase but as a cash advance. You don'to earn rewards on cash advances. Interest starts accruing immediately on a cash advance also. I would recommend that one would never use a credit card on transactions runvas a cash advance unless absolute emergency. Also bail bonds are run as cash advances, as...
The example of paying taxes with the card is WRONG. Based on how the taxing authority processed the transaction,bit is not run as a purchase but as a cash advance. You don'to earn rewards on cash advances. Interest starts accruing immediately on a cash advance also. I would recommend that one would never use a credit card on transactions runvas a cash advance unless absolute emergency. Also bail bonds are run as cash advances, as are prison commissary and phone services.
@ Melly -- I'm not sure what you are paying where, but Federal Taxes paid through the services linked in the post absolutely count as purchases.
Reserve and unlimited freedom gives the same or more.
@Duke
ETF trades are free with Merrill Edge (up to 100 trades per month). What's your point? As for Charles Schwab that a few posters mentioned, only Charles Schwab ETF trades are free on Charles Schwab. Many Charles Schwab ETFs are good but you can buy the very same ETFs on Merrill Edge--they are not unique to one trading platform.
This is actually out there for a long time. I thought everybody knows about the relationship bonus.
@ Ben Hughes
You remind me of a young private banker trying to sell me investments who understands very little that he can't answer my follow up questions.
As someone who already have 100k in ML, yes it does count for BofA. You get free trades, and other perks similar to those entry level private banking.
Face it...
This is actually out there for a long time. I thought everybody knows about the relationship bonus.
@ Ben Hughes
You remind me of a young private banker trying to sell me investments who understands very little that he can't answer my follow up questions.
As someone who already have 100k in ML, yes it does count for BofA. You get free trades, and other perks similar to those entry level private banking.
Face it bud, you are wrong. You didn't look at other benefit that comes with it. For people who already have sizable investments the opportunity cost is fairly low.
Now is it worth to shift your portfolio to ML, if it's big enough and you can get by free trades they give.
And you get free museum visits too.
@Duke
That does not describe the situation for a vast majority of people on here. No one cares about your attempt at gatekeeping/humblebragging - the end result is that your situation doesn't apply to many that do have to pay a flat fee. In the real world, median portfolios values are well under 500k and average person loses $5-10 per trade. Besides, what kind of pompous a-hole comes on here and starts making adhominem attacks about what my portfolio is worth?
@shadowx360 -
I hope you realize that the cost of a trade in most ETF circles is valued as a % of the total amount generally 0.05-0.1%.
If you’re being charged a flat $ amount per trade, then you are swimming with the guppies and shouldn’t be posting your advice on trading here.
So when you think, hmmm I got 100 trades for free last month, so I saved (500-1000$), you’re really glad because 1/10th...
@shadowx360 -
I hope you realize that the cost of a trade in most ETF circles is valued as a % of the total amount generally 0.05-0.1%.
If you’re being charged a flat $ amount per trade, then you are swimming with the guppies and shouldn’t be posting your advice on trading here.
So when you think, hmmm I got 100 trades for free last month, so I saved (500-1000$), you’re really glad because 1/10th of your pot was spared.
In the real world, ETF costs are so low compared to the sack that no one cares!
@Ben Hughes
It's only financially shortsighted if you don't have full knowledge of the Merrill benefits with 100k in an ML account. You get 100 free trades/month on top of the 2.625% cash back, plus extra if you have the Cash Rewards card. I would still rather have my money and free trades are BoA than Schwab. As for transferring costs, they offer a $600 bonus for switching. It's a win-win-win.
(continued)
even considering this card if amazing travel is your goal???
Very interesting discussions on opportunity costs, card value return etc.
But I think we are losing sight of the main value of points - and the main reason I feel most of us are on this sight..... Using points for awesome flights and hotels!!!
Am I missing something here? I just booked a one way JAL first class flight from India to USA with stopover in Park Hyatt Tokyo and for 70,000 alaska and 30,000...
Very interesting discussions on opportunity costs, card value return etc.
But I think we are losing sight of the main value of points - and the main reason I feel most of us are on this sight..... Using points for awesome flights and hotels!!!
Am I missing something here? I just booked a one way JAL first class flight from India to USA with stopover in Park Hyatt Tokyo and for 70,000 alaska and 30,000 hyatt points.
That works out to almost 13 cents/mile (13% return) for the plane ticket and 5 cents/mile (5% return) for the hotel!
Use your brains guys - I appreciate Lucky and his website, but he has to make dough through referrals.
Pumping up how amazing this deal is really goes against everything this website was founded on - getting oversized travel value through credit card points
Why are you guys
i have this card and was going to cancel it, but the airline incidental credit worked for AA gift cards
If you are interested in moving investment assets over to ML to qualify for the Preferred Rewards bonuses -- using DRIPs held via computershare, 401K/IRA held elsewhere, etc. -- do so when ML is offering a good cash bonus for the new account. They frequently run cash offers up to $600 for new accounts; and I think once a year or so that publicly advertised incentive goes up to $900. You can also call ML...
If you are interested in moving investment assets over to ML to qualify for the Preferred Rewards bonuses -- using DRIPs held via computershare, 401K/IRA held elsewhere, etc. -- do so when ML is offering a good cash bonus for the new account. They frequently run cash offers up to $600 for new accounts; and I think once a year or so that publicly advertised incentive goes up to $900. You can also call ML and see if they will give you a higher undisclosed offer for transferring larger amounts. Then such a move makes total sense. We have the B of A travel rewards card (with no annual fee) and that is our go to "no special category" spend card for the 2.625% return (applied toward travel expenses but B of A counts a ton of stuff as eligible travel expenses including parking meters, zoo admissions, etc.). Once you get the Preferred Reward status, look at the B of A Cash Rewards card, too. It has no annual fee and a fixed 2% return on groceries (so Platinum Preferred Rewards status mean 3.5% return). The Cash Rewards card has a 3% return category (or 5.25% for Platinum Preferred Reward folks) on a category of YOUR choice -- and you can change once a month: dining, drug stores, gas, home improvement, online shopping or travel. I love the fact that I have control over the 5.25% return category; I am not a fan of cards that have rotating bonuses as that's just one more detail that constantly changes.
The combination of the Alliant Credit Union Visa and the Chase Sapphire Reserve beats this hands down. Alliant 2.5% cash back on everything. Chase Sapphire Reserve 3x1.5=4.5% back on restaurants and travel.
@G Fair enough, but the analysis gets significantly more complicated when comparing opportunity costs of brokerage accounts than with savings accounts. For someone who spends even, say, $50k / yr in *completely non-bonused spend*, we're talking about a grand total of $187 per year in marginal benefit by having $100k in ML. The switch costs alone (even setting aside other costs as opposed to using something like Schwab) make that benefit fairly suspect.
The point...
@G Fair enough, but the analysis gets significantly more complicated when comparing opportunity costs of brokerage accounts than with savings accounts. For someone who spends even, say, $50k / yr in *completely non-bonused spend*, we're talking about a grand total of $187 per year in marginal benefit by having $100k in ML. The switch costs alone (even setting aside other costs as opposed to using something like Schwab) make that benefit fairly suspect.
The point is that it's easy to look at 2.625% and see that as super high number for a floor on non-bonused spend, but when that comes coupled with other things affecting your financial life in various ways, I just don't think it's very compelling.
@Ben Hughes it's not that bad if you have a retirement account that you can to Merrill Edge. If you've been maxing out your 401k for the past 3 years you could at least qualify for platinum which gives you 30 free trades which you can use to buy Vanguard ETFs.
@Miles the big barrier for the Schwab platinum is the $550 annual fee. I guess if you value the airline and Uber credits...
@Ben Hughes it's not that bad if you have a retirement account that you can to Merrill Edge. If you've been maxing out your 401k for the past 3 years you could at least qualify for platinum which gives you 30 free trades which you can use to buy Vanguard ETFs.
@Miles the big barrier for the Schwab platinum is the $550 annual fee. I guess if you value the airline and Uber credits at face value it's more like $150 and you get $100 in Saks credit a year too but depending on your situation it's legitimately hard to get the full face value out of the Platinum credits.
But yeah, given the complications with BoA it's definitely not for everyone and neither is the Schwab AMEX. A lot of people are better off with a regular 2% card, but some people might be able to maximize other combinations like this.
@Ben
you don't need to park "100k cash" with BofA, if you have 100k stock in AMZN/GOOG or so, just move it there and you're good to go.
@Ben.....You do not have to "park" $100k in a boa account earning .1%. You can have that money in a ML investment account that will earn well over 2.25% if invested even remotely wisely.
Easier to just stick with Chase CSR and keep my preferred bank. May be a good option for those who use BOA as their primary banking institution though.
Well I'm sure there are readers of this blog with > $100k already parked at BOA/ML that will find this useful so thanks Lucky.
Sure, but then you have to park $100k at BofA at 0.10%... Compared to, say, Ally at 2.2% that's a 2.1% opportunity cost, or $2,100 per year. Compared to effective 2.25% back with Chase Freedom Unlimited, the additional 0.375% back with this card at that Platinum level puts a break even point at over *$500k/yr in non-bonused spending* before it starts to make sense... Yes, the calculation is a little more complex with taxation of...
Sure, but then you have to park $100k at BofA at 0.10%... Compared to, say, Ally at 2.2% that's a 2.1% opportunity cost, or $2,100 per year. Compared to effective 2.25% back with Chase Freedom Unlimited, the additional 0.375% back with this card at that Platinum level puts a break even point at over *$500k/yr in non-bonused spending* before it starts to make sense... Yes, the calculation is a little more complex with taxation of interest but not points, but similar analysis applies (discount $500k by 35% or whatever).
Great example of where optimizing one area of your financial life (miles and points) can come at the expense of another area (interest income) in fairly subtle ways.
> This is truly ridiculously generous, as they presumably lose money on you on every transaction.
Sure, they are "losing money" on every transaction while they make $2,000+ off your parked balance in your savings account there. Again, with a break even point of over $500k in the above analysis, pretty sure it's not BofA who is losing out (on net).
Assuming you want a premium card, seems like you could get the same result with a Charles Schwab Platinum card and a Blue Business Plus, with a lot less hassle. Or am I missing something?