- Centurion Member
- Posts: 532
- Joined: Thu Jan 17, 2013 7:20 pm
- Location: United States
With the change in February, my old World Mastercard from BofA changed over to their new BankAmericard Cash Rewards card as I requested. For Visa holders, this is a Visa Signature card although mine was originally a Mastercard and still is from the transition (much like my Chase Freedom is a Mastercard after upgrading from a Slate Mastercard). So I decided to look closely at the new benefits. They are:
3% on gas
2% on groceries
1% on everything else
That sounds like a great all around card until you get to the point where you see the card is capped on gas and groceries for $6000 a year ($1500 a quarter, gas+groceries combined), much like Amex BCE is. So for a family like mine that spends three times that amount in groceries a year (before you even get to gas), it's less of a great deal but still not bad.
Where things get interesting is that BofA apparently is borrowing on of Chase's more popular features in that you get a 10% bonus cash back award if you tie the reimbursement to an existing BofA checking or savings account. I would do that with Chase but Chase banks aren't in my region of the country. But BofA is and it's my primary bank, so that's a free benefit that can be dumped directly to my savings account.
BofA also has a new BankAmericard Privileges with Cash Rewards card. Also a Visa Signature, this card carries a $75 annual fee and on the surface seems to have the exact same benefits as the regular cash rewards card. 3% gas, 2% groceries, 1% all else, same interest rates, same everything. So what are you paying the fee for? Apparently the bonus for using a BofA account for cash bank redemption is spiked to an eyebrow-raising 50%. So if you make $25 in rewards, BofA drops $37.50 into your account. There doesn't seem to be any limit on this (other than the aforementioned caps). The problem with all this is the $75 annual fee. At what point do you have to use the card to make the 50% benefit worthwhile? And does it compete with or trump other cards like Amex BCE/BCP?
I calculate that if a family is spending $10,000 on groceries a year and $4000 on gas, if you use the BofA card exclusively for both, a user will tap out on 3%/2% cashback bonus 5 weeks into the quarter. That works out to $34 a quarter for 3%/2%, ignoring any 1% purchases, or $136 for the year. So you're already above the annual fee but then you throw in the additional 50% bonus for using BofA accounts which nets you a total of $204. Subtract $75 and you're back to $129 or savings.
In the end, Amex BCE/BCP are still superior products since most people spend more on food than gas. For groceries only, BCE will still net you $180 a year at 3% versus $132 at 2% for BofA ($120+$12 bonus). And for the BCP, 6% cash back on groceries is still $360-$75(fee)=$285 versus just $120+$60(bonus)-$75(fee)=$105 for 2% groceries for BofA Privileges.
If you just use BofA Cash Rewards as a gas card only, it looks better in that you get $180+$18(bonus)=$198 back a year (3% of $6000 capped) versus $120 doing the same for Amex BCE (2% of $6000 capped). Ironically, you lose money this way if you choose the BofA Privileges card since the $60 in bonus you'd get for gas and depositing in your BofA account is more than offset by the $75 fee. And we all know, there are better gas cards out there like PenFed Platinum (5% uncapped).
In other words, for most people, an Amex BCE with no annual fee will beat a BankAmericard Privileges Cash Rewards with an annual fee.
American Express Platinum (NPSL)
Penfed Platinum Reward Visa ($28K)
Chase Freedom Visa ($25K)
Fidelity American Express ($20K)
American Express Blue Cash Preferred ($20K)
Bank of America Cash Rewards MasterCard ($20K)
Citi Thank You Preferred Visa ($9.5K)
Chase Sapphire Preferred ($7.5K)
US Bank Cash + Visa Signature ($7K)
Discover IT ($4K)