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).
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.
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).
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
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
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).
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:
Required 3-month average combined balance
$20K to < $50K
$50K to < $100K
Rewards bonus on eligible BofA credit cards
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.