Bank of America’s Preferred Rewards program is an incentive program that’s designed to entice accountholders to consolidate their financial lives under the BofA umbrella.
And, as our forum members have discerned, it can become a credit card rewards-maximization strategy that might make it worth using a BofA card to pay your taxes and other traditionally card-unfriendly bills.
First, get Preferred Rewards status
The first step is getting into the Preferred Rewards program, and that requires you to have at least $20,000 across your Bank of America, Merrill Lynch and Merrill Edge accounts (average 3-month combined balance). Upper tiers of the program require bigger balances:
Platinum Honors: $100,000
So which accounts count – or don’t count — toward your Preferred Rewards status?
Eligible accounts (with Bank of America, Merrill Edge and Merrill Lynch):
- Money market savings
- IRA (traditional, Roth, rollover, SEP and simple)
- Cash Management
- 529 plan
- Revocable grantor trust accounts
- Merrill Edge investing and trading accounts
- Individual and joint brokerage accounts
Ineligible accounts (These accounts do NOT count toward your Preferred Rewards status):
- Accounts on which you’re not owner or co-owner. For example, accounts on which you are custodian, administrator, power of attorney, beneficiary, guardian, administrator or executor.
- Business/commercial accounts
- SafeBalance Banking accounts. SafeBalance accounts are alternative-banking accounts with lower maintenance fees and overdraft-prevention.
- Irrevocable trust accounts
- Uniform Transfers to Minors Act (UTMA) accounts and Uniform Gifts to Minors Act (UGMA) accounts
- Employee-benefit plans, including 401(k) plans
There’s one more requirement (in addition to maintaining a minimum balance across all accounts) – you must always keep an open Bank of America checking account, a Bank of America spokesperson confirms:
Preferred reward perks
Preferred Rewards status comes with a variety of perks, which increase as you move up the ladder from Gold to Platinum Honors. You can see them in detail here. But they include interest-rate boosts on money market savings accounts, free transactions at other banks’ ATMs, waived fees for trades with online investing accounts, access to better customer service, discounts on mortgage origination fees, rate discounts on auto loans, waived monthly maintenance fees on bank accounts and waived fees on rush replacement for cards.
But one of the most interesting perks is boosted rewards on Bank of America credit cards:
More credit card rewards with Bank of America’s Preferred Rewards
|Bank of America Preferred Rewards: Credit card rewards boost|
|Preferred rewards tier||Rewards boost|
|Gold ($20,000 combined balance)||25%|
|Platinum ($50,000 combined balance)||50%|
|Platinum Honors ($100,000 combined balance)||75%|
That means, if you have an eligible Bank of America credit card, you get the rewards boost corresponding to your tier. Not all cards are eligible. The following cards, for example, will NOT earn you the rewards boost: Business cards, the Better Balance Rewards card, Merrill-branded cards, Alaska Airlines cards and other co-branded airline/travel rewards cards.
Doing the rewards math
You receive the credit-card rewards boost upon redemption. So, if you have the BankAmericard Cash Rewards card and are redeeming $100 worth of cash back, you’d get $125 with Gold status, $150 with Platinum status and $175 with Platinum Honors status.
If you have the BankAmericard Travel Rewards card, meanwhile, you’d normally earn 1.5 travel points per dollar. Points are worth 1 cent each when you redeem for statement credits against travel. So you’re essentially earning 1.5 percent back, assuming you redeem for statement credits against flights, hotels, vacation packages, cruises, rental cars or baggage fees. Doing the math, that translates into 1.875 percent back with Gold status, 2.5 percent back with Platinum status and 2.625 percent back with Platinum Honors status.
The rewards implications
With the BankAmericard Travel Rewards card, you can earn up to 2.625 percent back for travel statement credits, assuming you have high enough balances in your BofA and Merrill Lynch accounts. That’s compelling for two reasons:
1. It’s rare to find cards that give you more than 2.5 percent cash back on all purchases: There are a couple options in the 2.5-percent club, including the USAA Limitless card (not available to all) and the Alliant Visa Signature card ($59 annual fee).
2. Earning 2.625 percent back means, suddenly, paying by card becomes lucrative in situations where it used to be a bad deal. Lots of big expenses (taxes, tuition, utilities) can be paid with credit card, but for a fee. Convenience fees for paying taxes via credit card hover at around 2 percent. For tuition, you can expect to pay an average of 2.62 percent in convenience fees, according to a 2016 survey by CreditCards.com — but some schools charge less.
What’s more, the service Plastiq allows you to pay pretty much any bill via card, for a 2.5 percent fee. Sure, if you have Platinum Honors status, you’re earning only 0.125 extra in rewards. But, if you pay a lot in rent – or have a big bill from a contractor doing work on your house — you can still come out slightly ahead with Plastiq, Preferred Rewards Platinum Honors Status and the BankAmericard Travel Rewards card. Since you’d otherwise earn no rewards from these miscellaneous purchases, you can consider that a win.
Should you move all your money to Bank of America?
The rewards math is only half of the equation. If, for example, your money would earn more in a savings account outside Bank of America (and more than the extra rewards you’d earn on credit card spending), don’t move it.
This strategy likely makes the most sense if you already have high balances in Bank of America accounts (perhaps you have significant investment accounts or your IRA with Merrill Lynch already). If that describes your situation, you’d just have to add the BankAmericard Cash Rewards or Travel Rewards card to the mix to take advantage of the extra rewards.