Bank of America made headlines today by announcing their version of a premium travel rewards credit card. The Bank of America Premium Rewards credit card is the newest card offered from the bank. A link to the product page can be found here. Although the name implies the card competes directly with other ‘premium’ travel credit cards, I’m not so sure it does.
At face value the Bank of America Premium Rewards credit card competes directly with the Chase Sapphire Preferred credit card. Both cards offer 2X points on travel and dining and come with $95 annual fees. However, that’s mostly where the similarities end.
Bank of America Premium Rewards Benefits Overview
You’ll have to forgive me, but I’m finding it difficult to explain exactly how this card works. See, Bank of America is marketing this card as a flexible points currency rewards credit card, but it’s not. Essentially, the card earns ‘points’, but those points are only worth $0.01 when used toward travel, gift cards, or statement credits. Additionally, existing Bank of America customers have the option of depositing these points directly into their checking, savings, or 529 account at a $0.01 value as well.
The card comes with a $95 annual fee (not waived the 1st year), but offers an “airline incidental statement credit” of $100 annually. That statement credit covers qualifying travel purchases which include seat upgrades, baggage fees, in-flight services, and airline lounge fees. At the moment, I’m not sure if that travel credit would also cover airline gift cards, but I’m sure we’ll find out soon.
The Bank of America Premium Rewards card also offers the ever popular $100 Global Entry / TSA PreCheck statement credit every four years. In total, card holders receive approximately $125 back in travel related statement credits each year. Those statement credits more than offset the annual fee for the card at just $95.
“Unlimited Points With Flexible Redemption Options” – Bank of America
Their words, not mine… The Bank of America Premium Rewards card earns 2X ‘points’ on travel and dining purchases and 1.5X points on all other qualifying purchases. Unlike other true flexible points currencies, Bank of America points can’t be transferred directly to other loyalty programs. Instead, customers have the option to redeem points for cash back in the form of statement credits, deposited into eligible BOA or Merrill Lynch accounts, used to purchase travel from the BOA travel center, or redeem as gift cards. Basically you can use these points any way you’d like, as long as it’s basically cash back at a $0.01 value.
By this point (no pun intended) I’m sure you’re already deciding this card might not be for you. I agree, but the next section may change your mind if you’re an existing BOA customer.
Relationship Bonuses
Bank of America is known for “enhancing” their products for their loyal customers and this card is no exception. Card holders who also maintain account balance with Bank of America or Merrill Lynch can improve their points earning potential. Those bonuses are as follows:
- Customers with between $20,000-$49,999 in combined eligible accounts earn 2.5X points on travel and dining and 1.88X points on all other purchases.
- Account balances between $50,000-$99,999 earn 3X points on travel and dining and 2.25X on all other purchases.
- Lastly, customers with over $100,000 in combined account balances earn 3.5X on all travel and dining purchases and 2.63X points on all other purchases.
The image below helps depict the above information based on $10,100 of travel and dining purchases in a year:
As you can see, Gold Preferred members earn a 25% bonus, Platinum Preferred members earn a 50% bonus, and Platinum Honors members earn a 75% bonus on annual point totals.
That relationship bonus is what turns this rather average card into a point earning powerhouse for everyday spend. If you have $100,000+ in combined accounts with BOA you could earn 2.63% cash back annually.
Other Premium Rewards Benefits
The largest unmentioned benefit thus far is the current 50,000 point signup bonus. New applicants receive 50,000 ‘points’ after spending just $3,000 in the first 90 days following account opening. Since all points are worth exactly $0.01 that’s $500 in cash back.
Additionally, the card comes with the standard travel, purchase, and auto rental benefits offered from other Visa Signature credit cards.
My Initial Impressions Of The Bank Of America Premium Rewards Card
Well, I’m sort of lost. Based on the name and the timing of the release of this card, I expected it to compete directly with the Chase Sapphire Reserve or Citi Prestige cards. Instead, the card doesn’t even quite compete with the Citi ThankYou Premier or Chase Sapphire Preferred. While the 2X points on travel and dining or 1.5X on everything else is appealing, the value of those points isn’t. Sure you have the potential to earn a boat load of “points,” but they aren’t aren’t quite traditional points. This is plain and simple a cash back credit card. Points are worth $0.01 and no more.
Let me explain my biggest issue with this card. Let’s say I do have $100,000 with Bank of America (I don’t). Further, I’ll assume I spend $30,000 a year on travel and dining and $20,000 a year on all other non-bonus spending. For arguments sake, I’ll put all of that spend on the Premium Rewards card. At the end of the year, I’ll earn approximately 157,500 points worth $1,575.00 in cash back.
Instead, if I put that same spend on the Chase Sapphire Preferred card I’d earn (just) 80,000 points. However, I can transfer those 80,000 points to United and fly one-way business class to Asia worth at least $2,500! Sure it take slightly more effort to use the points, but the transfer and booking process with United is easy. Not to mention there are almost always some options available when searching. Keep in mind if you put that exact same spend on the Chase Sapphire Reserve card you’d earn enough points for a one-way Lufthansa First Class flight worth at least $7,000!
Final Thoughts
While I’m overall excited by the Bank of America Premium Rewards credit card, I think it’s overhyped by certain travel experts. Although some may rave about the card, keep in mind they might be receiving compensation for their reviews…
While I don’t think it’s is the game changer Bank of America thinks it is, I still find this card hard to pass up. First of all, Bank of America is paying you to open an account. There’s really no cost to you other than the short-term impact to your credit score.
I’m currently an existing Bank of America and plan to open an account soon. My plan is to open the card, earn the $500 sign-up bonus, and use the card occasionally after that. Keeping this card open is a simple decision as long as you maximize the annual travel credit. You’ll earn $5 from Bank of America each year you do so. I’m not in any rush to open the card and plan to wait until near the end of the current sign-up offer. After all, I want to make sure I’m below the dreaded Chase 5/24 rule.
