Bank of America’s new premium credit card offers big rewards … to some cardholders

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Here comes another big bank with big plans to roll out a credit card packed with perk-heavy rewards. Bank of America is set to launch its own version of a premium rewards card in September, offering enhanced travel benefits and outsized cash-back benefits, but only to certain cardholders.

On the surface, the Bank of America Premium Rewards card’s goodies are similar to those of other mid-level rewards credit cards.

Features of the new card will include:

  • A sign-up bonus of 50,000 points, worth $500 if you spend $3,000 on the card within the first 90 days of card ownership.
  • A $95 annual fee.
  • Unlimited two points for every $1 spent on travel or dining, and one and a half points per $1 on all other spending.
  • An identical redemption rate whether you choose cash-back, travel or gift cards. Each point is worth one cent.
  • An annual $100 airline credit to use for baggage fees, in-flight food and drink, or flight change fees.
  • A $100 application fee reimbursement every four years for either Global Entry or TSA Precheck.

These are all nice, but perhaps not enough to consider switching from a similar product. The real value in this card is for those who already have a strong relationship with Bank of America. For them, this card becomes a friend with major benefits.

Those who have eligible deposit accounts — which includes savings and checking accounts at Bank of America or Merrill Lynch or Merrill Edge investment accounts, could earn as much as 3.5% back on their travel and dining spending and about 2.6% cash-back on all other spending. For those who qualify, it transforms the card’s earning potential from OK to best-in-class.

How does it work?

Customers enrolled in the bank’s Preferred Rewards program will receive enhanced credit card reward benefits in one of three tier levels based on the combined sum of their Bank of America accounts.

How the rewards tiers work
Deposit balance Rewards rate Rewards value
No deposit account 2% dining and travel, 1.5% all else $5,000 spend on dining and travel = $100 in rewards
3-month average combined daily balance of $20,000 to $50,000 2.5%; about 1.9% $5,000 spend on dining and travel = $125 in rewards
3-month average combined daily balance of $50,000 to $100,000 3%; 2.25% $5,000 spend on dining and travel = $150 in rewards
3-month average combined daily balance of $100,000+ 3.5%; 2.65% $5,000 spend on dining and travel = $175 in rewards

What’s the catch?

Bank of America wants to give potential cardholders incentive to do more than just swipe and pay the bill.

“We want to drive new deposits, and we want to bring in new customers to the bank through this program,” says Jason Gaughan, a credit card executive at Bank of America. “We’re building a rewards program that’s based on the relationship, that’s the foundation of Preferred Rewards. Based on your asset amount with the bank, it will unlock additional benefits to you.”

Is this a good deal?

Comparing the rewards benefits of this card to the hugely popular Chase Sapphire Reserve, if you qualify for the top tier in Bank of America’s rewards program, you’ll come out ahead. On $10,000 in spending over the course of a year on travel and dining, you’d earn $350 with the Bank of America Premium Rewards card and $300 with the Chase Sapphire Reserve.

But the Sapphire Reserve has other benefits like premium lounge access, a bigger annual travel credit, and increased points value when redeemed through the Chase portal for travel. It also carries a significantly higher annual fee.

If you’re already doing your banking with Bank of America or you have a qualifying Merrill Lynch or Edge account, the rewards benefits potential of this card could be amazing — especially if you qualify for the highest tier.

Remember, though, if you ever carry a balance, the APR on any credit card is always going to cost more than the value of any rewards. If you don’t pay your bill in full every month, it doesn’t make sense to get this card even with the enhanced rewards structure.

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