There was a time when redeeming miles meant it was easy to get a value of 2 or even 10 cents of value per mile.
While it’s still possible to get outsized values, miles are certainly less valuable than they used to be when US airlines all had published award charts.
You can still get excellent values thanks to earning more than 1 point per dollar, for example the Ink Business Unlimited® Credit Card earns 1.5 points per dollar, The Blue Business® Plus Credit Card from American Express earns 2 points per dollar on $50K of annual spending, or the Capital One Venture Rewards Credit Card, Capital One Venture X, or Capital One Venture X Business Card which earn 2 points per dollar everywhere.
But, if you want cash back, have investible assets, and don’t want to hunt for value, it can be worth looking into the Bank of America Preferred Rewards program.
If you have combined balances in Bank of America deposit accounts or Merrill investment accounts for a 3-month average of $20K you earn Gold, $50K earns Platinum, and $100K earns Platinum honors.
If you open a new account and bring those funds to Bank of America, you can request to be upgraded immediately, or it should be applied to your account automatically within several days.
Best of all, once you qualify for for a tier, you will keep that tier for a full year, and after the year there is a 3 month grace period to meet the 3-month average balance once again.
You can move over stocks, 529 accounts, retirement accounts, mutual funds, bonds, IRAs, 401Ks, ETFs, money market funds, etc. from other banks to meet those tiers.
Among a plethora of banking benefits and perks, Gold earns 25% bonus credit card rewards, Platinum earns 50% bonus credit card rewards, Platinum Honors earns 75% bonus credit card rewards.
Bank of America isn’t alone in offering benefits like that for credit card spending with large account balances. US Bank recently got in on the action, though initial reports appear to be negative, so the jury is still out on that. They also charge additional fees and require that you maintain the balance in your account to keep the benefits, versus keeping the tier for another 15 months as Bank of America allows.
Sample cards and increased rewards:
- If you use the Bank of America® Travel Rewards credit card, you’ll earn 1.5 points per dollar to use for travel and dining. But if you have Gold tier status you’ll earn 1.87 points per dollar everywhere, if you have Platinum tier status you’ll earn 2.25% points per dollar everywhere, and if you have Platinum Honors tier status you’ll earn 2.625 points per dollar everywhere. This card has no annual fee and offers 25K bonus points for spending $1,000 in 90 days, which can be redeemed for a $250 statement credit toward travel and dining purchases.
- If you use the Bank of America® Customized Cash Rewards credit card, you’ll earn 3% cash back in the category of your choice: gas and EV charging stations, online shopping/cable/internet/phone plans/streaming, dining, travel, drug stores/pharmacies, or home improvement/furnishings. If you have Gold tier status you’ll earn 3.75% cash back, if you have Platinum tier status you’ll earn 4.5% cash back, and if you have Platinum Honors tier status you’ll earn 5.25% cash back. You’ll also earn 2% cash back at grocery stores and wholesale clubs. If you have Gold tier status you’ll earn 2.5% cash back, if you have Platinum tier status you’ll earn 3% cash back, and if you have Platinum Honors tier status you’ll earn 3.5% cash back. Earn 3% and 2% cash back on the first $2,500 in combined purchases each quarter in the choice category, and at grocery stores and wholesale clubs, then earn unlimited 1% thereafter. This card has no annual fee and offers a $200 cash rewards bonus for spending $1,000 in 90 days.
- If you use the Bank of America® Premium Rewards® credit card, you’ll earn 2 points per dollar spent on traveling and dining to use for travel and dining. But if you have Gold tier status you’ll earn 2.5 points per dollar, if you have Platinum tier status you’ll earn 3 points per dollar, and if you have Platinum Honors tier status you’ll earn 3.5 points per dollar on travel and dining. Points can be converted to cash at 1 cent per point deposited into your Bank of America account. This card has a $95 annual fee, but also earns a $100 annual airline fee credit and Global Entry/PreCheck fee reimbursement. It offers 60,000 bonus points, a $600 value, for spending $4,000 in 90 days.
Do you use this strategy to maximize your cash back instead of mileage earnings?
Leave a Reply
65 Comments On "In An Era Of Mileage Devaluations, Should You Invest In Bank of America Preferred Rewards For 2.625% Or More Cash Back Everywhere?"
All opinions expressed below are user generated and the opinions aren’t provided, reviewed or endorsed by any advertiser or DansDeals.
Bank of America also pays a fractional percentage of interest for savings accounts then other banks
You can buy treasuries.
For me personally, not worth it.
I spend 50k a year on a 2 percent cashback card mostly on tuition (we drive on family trips and prefer airbnb to hotels). For an extra .0625 percent, I would get 312$ which I would end up paying bank of America in fees anytime I wanted to transfer or withdraw money on their ancient systems.
I could make more by opening up all the new checking account offers I’m constantly getting in the mail.
Not necessarily. Once you reach Platinum Honors most of the fees are waived
What are your thoughts on the new US Bank Smartly card? Is 4% Cashback on everything just too good to be true and cannot be sustainable? I’ve heard some people are getting very low credit limits on the card, but query whether that’s a ploy.
Mentioned in the post.
I received a 15K limit and requested an increase (online) and immediately was raised to 25K
If you have the Elite card you also can get 25% boost when redeeming for travel using the BOA Travel Portal
There are few instances where the higher fee on the Elite card is worth this. (You have to be spend a lot on airfare to make this bonus offset the paid fee).
The $150 lifestyle credits are very easy to use, and the $300 airline credits are certainly alot easier to use than Amex Platinum airline credit. So depending on your situation … it can be worth it.
You still find up with an annual fee vs Premium Rewards
Correct. But… for the first year at least – the premium Elite is an easy choice though – since you get the signup bonus + the credits for two calendar years. If you keep it for a 2nd year AF – then it becomes if that $100 extra cost is worth it for benefits like the 25% boost (it was easily for me this year), the trip insurance (makes sense since you have to use the portal for the 25% bonus), and the primary rental car coverage with 3.5% reward (nice). Beyond year two — it’s not worth it for me because then I will have been two years without the regular Premium rewards card (which I canceled when after I got the Elite). So I can then again get the signup bonus on the regular premium card again, cancel the Elite, and go two years on the Premium (non elite) rewards card to continue the cycle 🙂
The only one this would realy be worthwile is if you can achieve the platinum honors level and get 2.625% on all spend.
For the catogery specific spend you can do better elsewhere.
Robinhood recently launched there CC that earns 3% CB everywhere that is really wonderful for those who anyways have Gold membership with Robinhood and it is also a good way to continue investing the CB (S&P etc.) or you can just earn 4.25% (current rate) for just leaving it sit in Robinhood.
Not worth paying for RH Gold just for 4.25%, you can do better for free.
Also read reports of people not getting 3% on many purchases, so the jury is out on that.
Right, its just worth the $50 a year for RH Gold if you are using all the benefits of it in line with your investments, the 4.25$ is just a bonus,
I have already spent approx. 30-40K and received 3% on all of them.
What other benefits do you use from RH Gold?
Aside from the $50 fee, the problem is that the RH card has no signup bonus and eats a 5/24 slot, which is a tough pill to swallow. Definitely increases the payback period versus other card options with a signup bonus and no fees. But it could still make sense depending on your spending levels and whether they honor the 3% on everything.
Have you tried using it for taxes yet? I’ve read reports that it can’t be used for that, which is not cool at all.
Also read reports that it can’t be used for rent payments, even when cards are accepted.
Sources and other worrisome threads on the card:
https://www.reddit.com/r/CreditCards/comments/1ex7k7v/spent_6k_at_costco_with_robinhood_gold_card/
https://www.reddit.com/r/CreditCards/comments/1ex7k7v/spent_6k_at_costco_with_robinhood_gold_card/
https://www.reddit.com/r/CreditCards/comments/1dsh46b/robinhood_credit_card_not_eligible_to_pay_tax
https://www.reddit.com/r/CreditCards/comments/1dsy45w/whats_the_point_of_having_the_robinhood_credit/
https://www.reddit.com/r/CreditCards/comments/1bpdf15/robinhood_3_cashback_hidden_fees_real_worth/
A (hidden) benefit of Gold is that it gives the first $1,000 of a margin loan free, so as long as rates remain high you can use that to buy short-term treasuries etf and basically break even on the fee.
SORRY ROBINHOOD MAKES IS SIMPLER THEN LOCKING UP 100K IN TREASURIES I WOULD PAY 50 DOLLARS A YEAR ANY DAY
Robinhood card seems like a joke from these DPs…
https://www.dansdeals.com/credit-cards/in-an-era-of-mileage-devaluations-should-you-invest-in-bank-of-america-preferred-rewards-for-2-625-or-more-cash-back-everywhere/comment-page-1/#comment-1747151
I moved my IRA to Merrill for a sign up bonus and got Platinum status, which gives me 2.625% on my Premium Rewards card. I’m finding I can usually do better, either by applying non-category spend to sign up bonuses, or by using Visa gift cards that I get through various deals (Staples, Stop and Shop). In the meantime, I’ve moved my IRA to Robinhood for the 3% match they had earlier this year and it’s stuck there for five years. When my Platinum status ends, I’ll consider moving other assets to Merrill, but since I have a few 2% cards, and I have the Ink Unlimited whose 1.5 UR is worth about 2.25% to me, I may not bother.
What Apr does the bank account offer
Just wondering why you haven’t posted anything on the U.S. Bank Smartly™ Visa Signature® Card together with a smartly Savings account(and various balances) you could earn up to 4% back.
It’s discussed in this very post.
I missed that and the link is blocked for me.
What’s negative?
And what additional fees are there?
4% is very enticing vs the 2.625% you’re talking about.
Need more data points, but this does not sound promising at all.
The lack of a signup bonus is also weak.
What’s the concern?
I got access to the X complaint. His mistake was to deal with a brokerage account. I opened a Savings account which I was able to do online without going into a branch… no issues. And I was able to get 17k as my initial credit line. Yes, I have a great credit score and history.
Most people don’t want to just leave that kind of money in a savings account that is likely to have a declining interest rate as rates come down.
I don’t know how much you spend on cc’s per year, but I did the math and for me it definitely makes sense. Even if I just max out my credit line each month at 17k I’ll come out ahead(think about 100k per year vs 204k spent on cc’s). Also, don’t forget interest from savings or anywhere else is taxable income whilst cash back is not tracked. So I’d trade one for the other.
Though Merril Edge doesn’t have ALL of those fees, many of the drawbacks he mentions can be said about it.
Merril Edge ISN’T competing with the likes of Fidelity, Schwab, E*Trade and more who have gone on the $0 commissions bandwagon.
While they have an interesting lineup of Money Market Funds, that’s almost where their advantage ends (other than qualifying for Platinum Honors). Can’t buy treasuries at auction online. Other bond purchases subject to fees. Many ETFs and CEFs aren’t available. Funds need to be in cash (which earns close to nothing) in order to be available for trade (supposedly other than SOME of the MM funds that are considered available for Cash Covered option trading).
It’s OK for accounts that won’t do much trading. Other than that, not a great platform.
You did not mention the US Bank Altitude Reserve and the potential 4.5 back (it is unavailable currently)
What about 4x mr on bgr on your top 2 categories up to 150k and 3% from Venmo card for your top category there
How’s BOAM with credit limits?
I hate playing the miles/points game and switched to chase for their 2.5% card
Does boam offer decent spending limits?
I have 140k limit on the card.
Anything similar that you would recommend for business spending?
Some of us are looking for a new card now that the Centurion card is devaluing
I have the discontinued Merrill + credit card, would I be getting more points per dollar on that credit card if I get to the platinum level?
If yes I would consider moving over some money for that
No, I’d recommend converting this to a different card once you use up your points.
I would use up your points and convert it to a different card. It’s a OK card, but there are better options at the same bank. I converted mine to a no FTF Customized Cash Rewards card.
Easier to just get different cards. For example: Capital One Savor Card for 3% cash back on dining, grocery, entertainment QuickSilver for 1.5% everywhere. Both cards with no foreign transaction fees or caps on cashback rewards. BofA charge foreign transaction fee last time I checked except for their travel card.
Good cards, but can’t compare to 2.625% everywhere.
Bank of America (Platinum Honors) Premium Rewards provides 3.5% on dining and travel, no FTF, easy to get AF reimbursed. Customized Cash Rewards provides 5.25% and categories include gas and dining, which you can change monthly. This card does have a FTF, but no AF. Grocery/Warehouse is always the 2% category which with the 75% bonus is 3.5% back. Up to you….BoA presents really good options if you have the 100K to park.
I’ve used this program at Bank of America for years. This has been the best cashback credit card I could find anywhere for general spend. I just had to move some stock to a ML brokerage account. It is shares of stock that I never sell and I’ve owned for 30 years. It just sits there and collects dividends.
Once you’re in premium rewards, you basically have no fees on anything. I can use any ATM in the country for free and get reimbursed the ATM fee. The brokerage account has no general fees and you get free trades. I will caution that the customer service at Bank of America is pretty bad if things go wrong.
I think the better choice is the AMEX Blue Business Plus Card.
Gets you 2 MembershipRewards points per dollar up to $50K. I also have a DL Skymiles credit card which generally means with the 15% discount on points, I can get a minimum 1.4-1.5 value out of DL points.
Convert the 2 AMEX points to Delta and you can get 2.9-3.0% back AND keep the optionality of doing something better with your MembershipRewards Points
Great card that I’ve written about many times, but this post is for someone who wants cash back.
It all depends of how much you spend.
RH Gold Card? It lasted me a month…after 30k spend they told me I was abusing the rewards and closed my card…what a joke. And I tried to spend in 2%ish cash back many many times…but it never last long for me. Do you know why? IT IS NOT FUN!
This is a fantastic card and comes with many perks at the Platinum level – it is available for business as well. UNCAPPED
if Capital one had a similar option, this could be very lucrative with a venture X that gives you 2% for everything
I think everyone is waiting to see if Discover will become Capital One’s answer to Chase Freedom.
I’ve been curious about the Scheab Amex. They have a private letter ruling from the IRS allowing cash back to be deposited into an ira as a bonus, which gets you over the annual contribution limit. It’s tempting to switch from the Fidelity 2% card for that.
I can’t find anything about a private letter ruling (which wouldn’t even be considered binding precedent), but that is an absolutely HUGE, and I cannot stress this enough, HUGE value. Theoretically unlimited ROTH IRA contributions with already after-tax money? That is insane!!!!! Dan should keep that posted at the top of the website!
Typically, credit card rewards/cash back are considered a rebate (or discount on the purchase), so the IRS has usually determined this cash isn’t taxable. There are exceptions though. For example, referral bonuses are typically considered taxable (> $600/yr). I would say that if you deposit cash (whether taxable or credit card rewards) into a Roth IRA, you are still susceptible to yearly tax limits ($7000/year in 2025 if you’re under 50 years old).
I am well aware of the IRS’s positions on these, as well as the court cases that have been fought.
I think you missed the point.
Schwab has been coding points transfers into IRAs as bonuses rather than as cash contributions. The IRS’s position has been that bonuses are allowed, and do not count towards the annual contribution limit. Taken together, that means that one can theoretically contribute an unlimited amount to a ROTH IRA. Plus, since it is credit card rewards (which are non-taxable), it’s the equivalent of contributing after-tax dollars to a ROTH IRA. That is insanely huge!
Meg mentions a private letter ruling, which would not be considered binding precedent for anyone other than the recipient of said ruling, but I cannot find any mention anywhere.
I’m not sure how the IRS would be able to argue in court that we allowed it for Meg, but she’s special. That letter should be easily discoverable.
@AE I’m guessing you have some way of churning points that makes this better than setting up a business with a solo 401k?
These cards are the best value out there, period. uncapped both for personal and business
I’ve had very positive experience with US Bank 4% card so far.
Changes are coming. Already closed for branch applications and warning letters sent out about business spending.
Was never going to be a sustainable option.
I assume it’s good for someone that doesn’t want to be busy with 5 + cc keeping track categories etc. but if your willing to keep track there’s chase 5 percent category cards that are easily 6.25+ (straight up travel with chase or transfer bonus)there are citi category 5 percent cards(I got 2 one I use for gas other for groceries no quarter changes) there’s discover card with 5 percent categories- you can very often buy gift cards to use at retailers that aren’t in the 5 percent category – I’m not going to deny using my chase unlimited card or citi double cash card but it’s not too frequent… taxes I assume would be a sweet area
Taxes, insurance, medical. There’s Chase Ink for taxes and medical, but you’re limited on taxes.
Taxes, tzedakah, Costco for the Chase. 7.5% if you have the Sapphire Reserve. (5% * 1.5)
How does one “request to be upgraded immediately” — I opened this card moved my IRA over to Merrill but dont want to wait for 90 more days
Is there a disadvantage to just moving $100k of an simple asset (e.g., VOO) over to Merill to meet this requirement? It would be easier to just move $100k of cash and then move it out, but would that raise flags if you keep doing it?
Lately most businesses outside major corporate retailers charge either 2% or 3% credit card fee. I’m talking about everyone, from my hairdresser, dentist, doctor’s offices, even a major Chicago hospital, all car dealerships that I have been to in the last 6 months. (Honda, VW, Toyota, Hyundai, Lexus), same goes for local restaurants that are not major chains, the list goes on.
@dan how have you been dealing with these fees?
Seems the gold age of credit card rewards is coming to an end once using a credit card I was going to get more and more expensive even without carrying any insurance. This is really unfortunate because aside from credit card rewards, there’s numerous other reasons, for example, fraud, protection or purchase protection.