Why Chasing BOA 2.625% Cash Back Just Isn’t Worth It…To Me

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Chasing 2.625% Cash Back

Chasing 2.625% Cash Back with Bank of America: Worth It or Not?

With a portfolio of a few solid and some obscure credit cards, Bank of America is a strong card issuer behind Chase, Amex, and Citi.  Like the other big banks, BOA has a reliable set of options for cash back in addition to travel rewards.  My most recent activity with BOA has been through both flavors of Amtrak credit cards, and that goes back several years.  Beyond those cards, I really haven’t focused much on BOA.  That said, I’ve been focusing more on their cash back offerings of late.  Here’s how I decided whether it’s worth chasing 2.625% cash back with BOA.

BOA Preferred Rewards and Achieving Status

BOA’s banking loyalty program is known as Preferred Rewards.  PDX Deal Guy has written about this program previously here.  The program has been around for years, and while some names have been changed and tweaks have been made around the edges, it’s still basically the same program.  Here’s a quick refresher of the status requirement and levels:

Requirement:  To earn status at the following levels you must maintain a 3-month average combined balance at the following levels in your qualifying Bank of America deposit accounts and/or your qualifying Merrill Edge® and Merrill Lynch investment accounts.  Levels are:

Preferred Rewards Gold:  $20k balance requirement.  25% rewards bonus on eligible BOA credit cards.

Preferred Rewards Platinum:  $50k balance requirement.  50% rewards bonus on eligible BOA credit cards.

Preferred Rewards Platinum Honors:  $100k balance requirement.  75% rewards bonus on eligible BOA credit cards.

BOA provides the full list of requirements and benefits for all levels here.

Chasing 2.625% Cash Back

How to Achieve 2.625% Cash Back

In order to achieve 2.625% cash back on credit card spend, you must hold Platinum Honors status with BOA and obtain the Bank of America Premium Rewards Visa Signature card. (You can get 2.625% back in travel credit with the no fee BOA Travel Rewards card, too.)  This credit card earns 2 BOA points on travel/dining spend and 1.5 BOA points on all other spend.  With the 75% bonus, that’s 3.5 points on travel/dining spend and 2.625 points for all other spend. You can cash these points out at a 1:1 ratio into a Bank of America or Merrill Lynch account.

The 3.5% cash back rate on travel/dining spend is nice, but many of us focus much more of our spending in the “all other spend” category.  It’s also worth noting that BOA’s Cash Rewards card can provide up to 5.25% cash back with Platinum Honors status, but it’s capped at $2,500 spend per quarter per account.  Therefore, I will focus on the 2.625% cash back rate the Premium Rewards card provides for all other spend in this article, since a cardholder has the ability to comparatively scale this spend more significantly.

Other Opportunities

My wife and I each hold a Discover it Miles credit card, earning us 1.5% cash back and a 1.5% match at the end of the cardmember year.  The card is effectively a 3% cash back credit card for all spend in the first cardmember year.  There is no lifetime language in Discover it Miles credit card application.  Long story short, we have obtained 3% cash back long term with new applications and accounts.  This clearly provides better rewards to us than BOA would.

While not 2.625%, we effectively obtain 2.5% cash back with the Amex Blue Business Plus card (up to $50k spend per account) through the Amex Platinum Card for Schwab.  Also, we value the PenFed Power Cash Rewards Visa card, which is a solid 2% cash back earner for us when we feel like using it in addition to the Discover it Miles card.  The Citi Double Cash card also provides us 2% cash back and higher value for Thank You portal redemptions, including Disney World.  None of these cards have stringent, high account balance requirements to obtain those rewards rates.

Relationships

Obviously, the most significant part of obtaining Platinum Honors status is holding $100k in Bank of America checking/savings accounts or Merrill Edge/Merrill Lynch investment accounts.  We do not currently hold funds in any of those accounts, so this would require moving funds from one of our other investment accounts.  Our investment and retirement accounts are held with other entities, and we value the practices and principles of those groups.  Frankly, we aren’t interested in moving $100k from those parties to Merrill Edge/Merrill Lynch or Bank of America.  A credit card gimmick doesn’t move the needle for us, either.

2.625% is the Current Cash Back Rate

At the risk of stating the obvious, 2.625% is the current cash back rate for all spend on the BOA Premium Rewards Visa as a Platinum Honors member.  There is no assurance that BOA will not change the qualification requirements for Preferred Rewards or devalue the 75% bonus at any time they choose.  While this hasn’t happened recently, we have no control over Bank of America reducing their rewards or tightening their requirements.

Chasing 2.625% Cash Back
Earning 3% cash back on the Discover it Miles card simply cannot be beat.

Our Decision

We decided against chasing 2.625% cash back with BOA based on this analysis.  Via Discover, we are continuously obtaining 3% cash back, far superior to BOA’s offering.  We also value the 2.5% cash back play and Membership Rewards versatility of the Amex Blue Business Plus card over an extra 0.125% cash back from BOA.  Also, we are maintaining our relationships with the retirement and investment firms that most closely align with our priorities.

Worth It For Some

Of course, many will find going after a BOA Platinum Honors level with Preferred Rewards  and chasing 2.625% cash back with the Preferred Rewards Visa to be a worthy goal.  I particularly think it’s worth considering if you are unable to satisfy your needs with the Discover it Miles card or other cards providing superior rewards.  If you need significant spending capacity beyond what other more worthy cards provide, BOA is definitely worth exploring.  And finally, this BOA play may be worth it for those of you who already have an existing banking and/or investment relationship with BOA/Merrill.

Final Thoughts

We focus our cash back rewards with Discover, Chase, American Express, and Citi.  It’s always good to have other cash back options, though, and BOA provides strong cash back capabilities with a Platinum Honors relationship.  Regardless of bank, look for the optimal cash back rates for your specific credit card spend.  Do you take advantage of the 2.625% cash back rate with the Platinum Rewards Visa?  Why or why not?

Benjy Harmon
Benjy is a fan of points, miles, and financial independence. An experienced world traveler, husband, and father, he currently focuses on roaming throughout the USA expense-free (or close to it). He enjoys helping others achieve their travel goals, Disney-related and otherwise.

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19 COMMENTS

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19 COMMENTS

  1. Would someone please explain to me how you can get 5.25x back with the BOA cash back/ Premium Rewards combo even if you are a platinum tier?

    • Pretty simple. $100k+ means 75% bonus on all cash back, BoA Cash Rewards is 3x on the selected category (many pick drugstores or online shopping). 5.25x on up to $2500 per quarter in that category, provided you didn’t use some of it to get 3.5x on groceries.

    • BOA card was great for me because I was charging 600-800K per month adding up to big numbers in cash back. After about a year they blow me out of the water because, I’m guessing, that I over used my card!!
      Good while it lasted. Capital one is now my card of choice.

      • Wow, I haven’t heard that kind of BOA datapoint! Sorry you got shut down, but from the numbers you shared, it was worth it!

  2. If you’re willing to change banks or haggle with customer service, there are several no-fee 1.5% cards doubled to 3% for the first year (Discover, Santander, etc.). The total benefit of 3% vs 2% in a year’s non-category spending for me is about $130, so many “$200 after spending $3000” bonuses would outperform this, too. To me, that seems like less work than moving $100k around.

    It’s worth noting that there are no foreign transaction fees on the Premium Rewards Visa, which isn’t the case for most of the cards you’re comparing to (Double Cash, Freedom, etc.).

  3. Full disclosure: I work for Bank of America, but not in connection with credit cards. I also hold multiple cards from other issuers, including Amex, Chase Reserve, Citi, and Wells, so I’m not beholden to my employer when it comes to looking for the best card for spending.

    I appreciate the analysis, but I don’t understand what you mean when you say: “There is no lifetime language in Discover it Miles credit card application. Long story short, we have obtained 3% cash back long term with new applications and accounts.” and “we are continuously obtaining 3% cash back.” Does that mean you are earning 3% by annually churning? Or are you calling every year to ask customer service to extend the match again? Otherwise, I don’t know how you’d get 3% in perpetuity, since the offer terms expressly limit it to your first year.

    If you’re churning, that’s a significant issue. Churning supposedly affects one’s credit score, which may be hard to quantify in dollars, but it’s an issue. If you’re calling to get a courtesy extension, then the 3% is more of a YMMV proposition. That also undercuts your argument that there’s “no assurance” that BOA keeps the same rate, since it sounds like there’s no assurance that Discover continues to allow churning, keeps its rate, or otherwise agrees to a courtesy extension. If it’s easy to get 3% continuously, then please share your secret!

    I agree that BOA’s $100K account balance minimum is a significant hurdle for many folks. But if you have that much tied up in any stocks/bonds/mutual funds or retirement account, then it’s not a big deal at all. I have both Merrill and Schwab and they are functionally equal.

    doctorpipes already covered the advantage of pairing the BOA Cash Rewards Card and getting more cashback overall. Yes, that requires getting another card, so that should be factored into any analysis. He also mentioned the annual travel credit of $100, which is easily met because it allows for a broad range of qualifying expenses. One thing not yet covered is the $100 credit for TSA PreCheck or Global Entry every 4 years, so that’s a $25/year feature.

    If you can really get .74% more cashback through Discover without significant negative credit effects or hurdles, then your conclusion that Discover > BOA Premium only is accurate. But as it stands, I’d need to understand how you’re getting that benefit. Otherwise, it seems like having the BOA Premium and Cash cards is more advantageous.

  4. It could help to include the ME account opening bonuses in your equation: up to $600 per account type, with regular IRA and Roth as two different types. So potentially you can earn the $600 repeatedly depending upon what types of assets you transfer in. Also agree that you need a Cash Rewards card to make this work, and Travel Rewards can also be handy to spread the love.

  5. Worth pointing out the 50,000 points (AKA $500) sign up bonus on the Bank of America Premium Rewards. You could potentially get more from Discover in one year on quite a bit of spend. BoA Premium Rewards has $500/$3000 = 16.67% cash back + 2.625% going forward. Discover requires 16.67K to get $500 back. I personally prefer the Discover It 5% with the double cash back. This limits you to $1500/quarter at 5% though (for a total of $1500 x 4 = $6000), but you are at least netting 10% back instead of 3%. Just my two cents.

  6. I am definitely in the BofA camp. We have three cash rewards cards, with the most frequently used category choice online shopping. (5.25% up to $2,500 per quarter/per card.) Along with the Premier Rewards, (2.625%). I’m a CSR fan, but without travel right now, my BofA combo, along with the Chase Freedom, have resulted in a good return. Extra benefit with the CSR grocery bonus too. Merrill Edge has a decent investment platform, with 100 free trades a month? I think that’s right… either way, moving 100K to an IRA with them was very easy and I can make the same investment choices as anywhere else. Just my 2 cents.

    • I’m not sure if my dp is 100% correct, something about getting and keeping the top tier boa. Each yr, they take the average balance of April may and June. If the average of 3 month is over 100k, ur set for the rest of the yr. It’s not that u have to maintain 100k throughout the whole year. They also promised to keep at current level due to covid-19

  7. Good analysis. I would also point out that the Discover card functions as a first year 3% in the following way. The 3% is composed of two elements:

    A) Ongoing earn rate of 1.5%

    Plus

    B) one-time, lump sum sign up bonus

    The Bofa card generates an earn rate of 2.625% without needing to factor in the additional value of a one-time, lump sum sign up bonus.

    On the other hand, generate 2.625% requires the presence of 100K in assets!

  8. Solid article, but somewhat of a limited picture by only talking about Premium Rewards. The huge elephant in the room is pairing Premium Rewards with Cash Rewards, which would change the title of the article to chasing 5.25x. For me, the Premium Rewards and Cash Rewards combo has totally won me over from my Chase (CSR, Freedom Unlimited, Freedom) and AMEX (Everyday, Gold, and Platinum) trifectas. I’ve ended up axing the CSR and Gold because of the outsized rewards I get with that BofA Duo. With the pandemic raging, I’ve been getting my groceries online, so that’s 5.25x back (vs. 3.5x normally) on ~$500/month plus all my Amazon orders on Cash Rewards. It’s also possible to change your Cash Rewards 5.25x category to dining (or gas, home improvement, drug stores, or travel) if you’re more about that takeout life, but the point is that 2.625x back is my worst case scenario. Based on crude estimates in Quicken, my average annual return is about 4x with the BofA Duo, although I anticipate this to jump maybe 0.25-0.5x more over the next year since my frequent traveling and AMEX Platinum use have ground to a halt. I’ll take that any day of the week, along with the extra amenities that come with Visa Signature and the $100 travel credit (although we’ll see how the latter pans out given the pandemic). YMMV, of course, and the big caveat here is that you need at least $100K between BofA, ME, and/or US Trust to reap these benefits. If you’re able to do that (or even manage 3.75x with Gold tier or 4.5x with Platinum tier), that’s as competitive of a value proposition that you can get and destroys the Discover It card. That doesn’t even take into consideration Visa Signature benefits and being able to streamline redemptions into retirement and stock accounts across BofA, ME, and US Trust.

  9. I think you’re trying to justify to yourself or attempting to workaround why you can live without the BofA Premium rewards card when in fact it’s a simple, attractive, strong card. I’d rather take a consistent 2.625% cold hard cash year after year with the least effort instead of a one-time 3% bonus. Since Discover removed all their card protections, I’ve ignored them completely. The BofA card is not something you chase. It’s generally designed for those who have or are building a relationship with BofA. Their ME platform is pretty solid as it provides unique research and their ecosystem allows you to invest immediately after receiving your paycheck with relationship banking benefits. Over several years, I think the BofA card will come out on top for simple, straight cash for ‘Other’ category spending when you take into consideration annual fees and not being able to get certain signup bonuses consistently. But I can certainly see your point of view and respect your opinion and article on this.

    • Ron,

      I definitely can see the value of the BofA Premium Rewards card in the vein of the CSP/Citi Premier, albeit with slightly less utility for me. There’s no doubt it’s a strong card. I’ve been able to continuously get 3% with Discover beyond one time, though, and I value that over any protections they are missing. This is a clear example of us both being correct for our respective situations, in my opinion. I definitely value the first-person perspective you and Calwatch have shared – it’s how I’m learning more about Merrill from the insiders! Thanks for chiming in.

  10. If you are going to hold the same ETFs or stocks elsewhere then you might as well do it at Merrill (the only difference may be if you can qualify for the discount on the Schwab Amex Platinum, but that at most is $200 for $1M in assets). If your other retirement and investment vendors provide lower fees or better service, fine, but as a DIYer I find the BoA Securities reports to be extremely informative and worth the price of admission alone. And I don’t do enough MS to make applying for a Discover IT meaningful, beyond office store MS which is covered by Ink. For daily spend it’s good to have one card that I can get a good return on, without worrying about what category is rotating this month or who is offering a high rate.

    • Calwatch,

      Thanks for sharing your experiences with Merrill and BOA! I’m glad to know that setup is working out well for you.

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