Most student cards on the market are a rotten deal. I’m not denying the fact that the 18-24 age range is a riskier group for the banks – but still – that’s not an excuse for the excessive APRs and crappy benefits!

I had a BofA credit card at age 19. It wasn’t a student card but might as well have been, because it was a very basic account with almost no benefits.

Here’s a review of the current Bank of America student credit card. It has some advantages but also major disadvantages you need to know about.

Advantages?

Reasonable Interest Rate – Without a doubt this is the best thing it has going for it. Most cards in this category have APRs as high as 20% or more. However as of May 2012, BofA gives everyone the same rate:

It would still be stupid to carry a balance at that rate, but at least it’s somewhat reasonable (in comparison). Also there’s no penalty rate… in other words if you make a late payment, you don’t have to worry about them using that as an excuse to raise your interest rate.

No Annual Fee – Not really surprising though, as most student cards don’t charge a fee.

Account Management Features – Aside from the obvious things you would expect, there are a few unique features: the ability to text and get account information in seconds, as well as optional email/text alerts for balances and payment due dates.

Student Identity Theft Protection – The account offers this for 4 years with no charge. But what is it exactly? I had to dig in the application’s fine print to find out:

• Enrollment/activation is necessary to get the benefits (but there’s no charge to do that).
• Each business day your credit file is reviewed for signs of identity theft/fraudulent activity. Whenever “certain changes occur” they will notify you (but they don’t disclose what specific changes trigger that).
• If you’re a victim you can call and get advice, but you will be the one responsible for actually resolving the issues (such as contacting the credit bureaus, filing disputes, etc).

Other Benefits (Fluff) – When I looked at the BofA student card application there were several other benefits listed but they were basically just fluff. Don’t be fooled that it’s a “Platinum Plus” Visa as that doesn’t really mean anything nowadays (in fact, it’s the same level my BofA Visa also started out at when I was 19).

Examples of fluff? They listed 4 different benefits related to fraud liability and protection but at the end of the day those aren’t anything special because by federal law, you’re protected against fraud on all credit cards. If there are unauthorized purchases made, the most you can be held liable for is (a) a max of $50 if someone used your physical card to make the purchases, or (b) $0 liability if only your account number was used while the card was still in your possession. That goes for all credit cards, not just this one.

Disadvantages?

No rewards program – This is a major letdown and one of my biggest complaints about student credit cards… so many of ‘em don’t give you rewards!

Why not? I guess they think you don’t deserve them. Well, I say that’s BS! Whether you are 18 or 80, everyone should be getting something back. Credit card companies make 1-2% on your purchases (paid by the stores/merchants) so it’s only fair that they chuck back some of that to you, right?

If you want cash back or points, compare these student credit cards with rewards.

Few Useful Benefits – Aside from rewards, one of the main reasons (in my opinion) to have a credit card is so you can take advantage of the benefits it offers. With many other student cards, on qualifying purchases you can get a free extended warranty and 90 day protection against theft/accidental damage. Unfortunately you won’t get any of those with this bare-boned Bank of America Student Visa.

Contrast that to one of my favorite no annual fee offers, the Citi Forward card for college students. Yes, I do choose to advertise it and after you see all the benefits that come with it, you will understand why!

BofA Customer Support – Now in their defense, I have noticed their credit card customer support has improved lately. But still, it doesn’t exactly have the best reputation (to put it nicely). Probably the best student card for this category is from Discover. Did you know that all of Discover’s customer service reps are in the US? A rarity for a credit card, that’s for sure!

Verdict?

Overall, the Bank of America student card is an alright choice for building a credit history and score. But aside from the ID theft protection, the lack or rewards and useful benefits means all you are getting is plain vanilla credit card.

Be warned that even though the APR is below-average, it still doesn’t make any sense to carry a balance on. Simply put, all student credit cards (including this one) will have APRs higher than any student loan will charge. So if you need money for tuition and expenses, do NOT use a credit card as your source!

And on that note, If you think you will be prone to getting in trouble by using credit, then it will probably be best for you to avoid it altogether (at least for now). Here are some alternatives to using the Bank of America student credit card:

American Express Prepaid – You can only spend what you load onto the card, meaning zero debt! Getting the card is free.
Secured Credit Cards –With these types of cards your credit limit is back by your security deposit. Annual fees tend to be around $30-50 per year.

As someone who grew just a few miles from Michigan International Speedway, I know the Bank of America Nascar Visa card will peak the interest of any racing fan. But dig a little deeper…

Are the reward points really worth it?

You only earn 1 RacePoint per dollar spent. Now as is the case with any Bank of America credit card, there are some opportunities to earn additional points with online shopping partners, but aside from that, unfortunately there are no bonus categories for earning extra points.

So if you’re earning only 1 point per dollar, here’s how much you would have to spend to earn some of the prizes listed on the website:

Example 1: Chase Authentics Dale Earnhardt, Jr. Blackout Hat

It will cost 3,850 RacePoints, so you would need to spend $3,850 on your Nascar credit card to earn that many. However if you just buy the hat for cash, it only costs $22.95 to $24.95 (depending which site you buy it from).

That means your reward points are only worth around 6/10^th of a penny each compared to the $22.95 cash price. This isn’t very good when you consider you can get a straight 1% cash back with other cards.

Example 2: Honorary Pit Crew Member

If you can spend a cool quarter-million dollars, then you and a guest will have enough points for a VIP pit crew tour and watching the race alongside. There’s only 4 packages available per season and the participants shown are 48, 88, 42, 24 & 5.

An experience like this is actually a good deal for credit card rewards because it’s so unique. The downside of course is that few people will be able to spend $250,000 and rake up that many points, when you consider they expire 5 years for when they are earned.

Example 3: Sprint Cup Series

A limited number of tickets are available for each race on a first-come, first-serve basis. Unfortunately the website doesn’t tell us much other than that they “start at” 5,000 points per ticket. Without knowing the race and seat locations, it’s hard to tell whether you are getting a good point value or not.

Sidenote: Bank of America previously had a Nascar debit card which gave 1 point per $4 spent but it is no longer being marketed. My guess is that it was probably discontinued due to the debit card fee regulation which makes rewards a money loser for banks.

Verdict?

For lower tier rewards like merchandise and travel, the credit card rewards probably won’t be a good deal. If your spending is average, I see little reason to get the card.

However if you spend at least $20,000 to $100,000 per year, then getting the card could make sense. With that kind of spending, you will be able to save up a high number of points before they expire and that will allow you to redeem for those VIP experiences which you can’t always buy elsewhere.

Last but not least, will this card be discontinued?

Since summer of 2011 Bank of America has not been marketing the card on their website. Why? Well here was their response:

“We’re in the process of evaluating potential changes to the product features and have temporarily discontinued marketing the card to avoid any customer confusion.”

The Nascar credit card application is no longer available on either BofA’s website or Nascar.com. So even though it’s not officially discontinued, for the time being it doesn’t appear you can apply for it.

Meanwhile you may want to check out the Chase Freedom or the AmEx Blue if you are looking to score some serious rewards.

Written or last updated Dec 2011

With Bank of America’s $5 debit card fee kicking in for 2012, you have three options to avoid them…

First of all, you may want to freshen up on the difference between an ATM and debit card transaction.

• ATM transactions always require a PIN.
• Debit transactions are those without a PIN, processed like a credit card (and hence why you select “credit” after you swipe your card).

Your Bank of America debit card can function as both. When you go to a BofA ATM and withdraw cash or make a deposit, that is an ATM transaction. However if you use it at a store for a purchase and select “credit” it’s processed over the Visa payment network like a Visa credit card.

You won’t be charged the $5 fee if you only use your card for transactions at Bank of America ATMs. However, as soon as you start using it elsewhere, you may be subject to the new $5 monthly debit card fee (regardless of whether you press “debit” or “credit” during payment).

So you want to know how to avoid the debit card fee from BofA? Well here are three strategies you may want to consider:

#1. Stop making debit card purchases

The simplest way is to use your card for nothing more than deposits and withdrawals at Bank of America ATMs. If you’re accustomed to using your card for purchases, switch to cash, credit cards, or checks.

However credit cards aren’t for everyone. Sure, myself and many others love them because we like to milk the rewards and benefits. But if they cause you to overspend, then you should cross them off as an alternate option.

Checks on the other hand cost money for both account types, plus they are not always the most convenient and time-efficient method for many types of purchases.

That leaves us with cash. Good if you manage it properly. Bad if it gets lost or stolen.

#2. Dump Bank of America

If you feel debit (versus the alternatives) is still the best for your budgeting, then it might be time to break up with Bank of America.

There are plenty of free online checking accounts and credit unions out there which give you which offer free debit card transactions. Will it be a hassle to switch everything over and re-enter all your online bill payments? Yep. But think how much you will be saving…

• $5/month x 12 = $60 savings per year
• $60 x 5 years = $300 savings over 5 years

Is saving that much money worth the hassle of switching? You be the judge.

#3. Get rich

Okay, this obviously isn’t a very feasible solution, but for amusement sake it’s worth noting that so called “premium customers” which are those high net worth individuals with multiple accounts, will avoid Bank of America’s debit card fee.

But for all the rest of us which are not considered “premium,” we will be stuck with the $5 monthly charge. So I guess the other solution is to win the lotto jackpot if you want to avoid their debit card fee!

Bank of America credit cards have long had the stigma of not being very rewarding (in comparison to the other big banks like Chase and Citi). I see this first hand here on CreditCardForum, as you rarely ever hear the reward chasers and connoisseurs talking about BofA.

Fortunately in August 2011, Bank of America upped the ante on the Bankamericard Cash Rewards Visa Signature card. The new version definitely gives the other guys a run for their money.

Pros

More than 1% on categories – The card touts 1% on regular spending, 2% at grocery stores, and 3% at gas stations (up to the ceiling amount, which we’ll discuss in a moment).

No crazy redemption levels – The biggest drawback of BofA (and their subsidiary, FIA) credit cards is that most of them use WorldPoints. The WorldPoints redemption is very unfavorable, because you need to cash out $250 in order to get 100% value on your points. If you cash out 2,500 points, it only gets you $12.50 (versus $25 from Chase, etc.).

Contrast that to the BankAmericard Cash rewards, whereas $25 cash back equals a full $25 rebate. You can opt for a statement credit, check, or direct deposit. When you go with the latter (and deposit it into a BofA bank account) there’s a 10% boost. So $100 would be $110 via direct deposit.

Visa Signature Benefits – This tier of Visa cards comes with some useful perks, especially for travelers.

Cons

Quarterly rewards ceiling – Unfortunately there is a ceiling on the amount of bonus cash back you can earn on groceries and gas. Only $1,500 of spending in those categories per quarter will qualify. So if you spend an average of $500+ on groceries and gas combined, then you will be missing out on some extra cash rewards.

Not very high bonus percentages – Getting 1% to 2% extra on those two categories is definitely better than the base 1%, but when you compare it to some of the other credit card deals on the market, it probably doesn’t rank as the best program for most people.

Closest Competitors

The closest rivals to the BankAmericard Cash Rewards Visa are the following credit cards:

#1. American Express Blue Cash – There are 2 versions of this card, one has a fee and the other doesn’t. Depending on the version you pick, you will get 3% or 6% at grocery stores, 2% or 3% at department stores, 2% or 3% at gas stations, and 1% on all your other purchases. Unlike the BofA Cash Rewards card, with Blue Cash there are no ceilings or limits on rewards.

#2. Chase Freedom Visa Signature – Like the BankAmericard, this also has a quarterly $1,500 cap on the bonus rewards. However, the bonus payout is higher (5%) and the categories rotate with the seasons. Lately the signup promotion for it has been 2x to 4x higher than what Bank of America is offering on their Cash Rewards Visa Signature.

#3. Capital One No Hassle Cash Rewards – This one gives 1% on regular spending and 2% at gas stations and grocery stores. There is not rewards cap.

Verdict?

The latest Cash Rewards program on the BankAmericard is significantly better than the offer in the past (which only gave higher cash back on categories for the first 6 months). When it comes to reward cards from Bank of America, this is one of the best available right now. However whether or not it’s better than the other guys is a different story.

Last night I clicked on the “Transfer Money” tab on Bank of America to move some money from savings to checking. But instead of seeing the usual screen, I was first prompted with this…

…it was a solicitation for me to participate in their new program that gives you the ability to email money or send it via phone, to other accountholders at Bank of America, Wells Fargo, or Chase (if they are also enrolled in clearXchange service.

After clicking “Yes” here’s what the next screen said:

Introducing a new way to send and receive money. Now you can make transfers simply by using an email address or mobile phone number, with no account number needed. A fee may apply when you use this new service (fee waived for a limited time). The fee amount is disclosed prior to each transaction and is also in the service agreement. Please note that there are dollar amounts and other limits for these transfers. Please also see the service agreement for applicable daily cut off and delivery times.

About transferring money to others

• For a fee (fee waived for a limited time): Make transfers to another person using the recipient’s mobile number or email address.
• No fee: Make transfers to other Bank of America customers using the recipient’s account number. Most customers may also use Bill Pay to send money to individuals without charge (see your service agreement for details).

By checking this box and selecting “I agree” below, I confirm that I:

a. have read and agree to the terms of the service agreement, including the terms of the Email/Mobile Network Transfers sections;
b. consent to receive email and automated text messages about Email/Mobile Transfers;
c. will only register mobile numbers where I am the account holder; or if I am not the account holder, I have the account holder’s permission to register that mobile number; and
d. will obtain the consent of the person to whom I want to send a Mobile Transfer text message to receive the automated text message.
e. consent to receive surveys requesting my feedback about this service, even if I am on a Do Not Solicit list.

Message & data rates may apply. For help text “HELP” to 53849. To cancel your plan, send a text “STOP” to 53849 at anytime. In case of questions please contact customer service at 1.877.343.7174.

Supported Carriers: AT&T, Sprint, Nextel, Boost, Verizon Wireless, U.S. Cellular®, T-Mobile®, Cincinnati, Bell, Virgin Mobile USA, Cellular South, Centennial and Ntelos

I did some digging around on my own to find out more about this clearXchange (or as I was initially calling it, Clear Exchange) and this is what I’ve learned:

1. It’s a joint effort by BofA, Wells, Fargo, and Chase. It’s unclear whether it will be offered to other and smaller banks once the programs is completely rolled out.

2. Who they’re going after is Paypal, obviously. I’m all for this, because Paypal fees are outrageous (especially for non-credit card payments) so it would be great to see this become popular.

3. The banks are keeping tight-lipped about what the clearXchange fees will be. Currently no one’s getting charged but if you rewind back 10+ years ago, Paypal’s slogan was “Always Free!” and we all know that ended up being a crock.

What are your thoughts on this banking service for emailing money or texting money? Have you used it yet? Have any insight as to what the service fees will be?