Bank Of America Preferred Rewards Program Review

Many financial institutions offer incentive programs to encourage customers to increase the amount of business they do with that bank. Generally, customers that have a variety of deposit accounts, credit accounts and maybe a mortgage or car loan are more profitable than customers who only have one account, so banks want to encourage customers to consolidate their banking relationships. Bank of America offers such an incentive program called Preferred Rewards.

What Is Bank of America Preferred Rewards?

Bank of America Preferred Rewards is a rewards program meant to encourage Bank of America and Merrill investment customers to increase the assets they hold at Bank of America and with Merrill. To qualify for the program, customers must keep more than $20,000 in combined deposits in Bank of America deposit accounts and/or Merrill investment accounts.

The program rewards eligible customers with benefits including increased interest rates on deposit accounts, credit card rewards multipliers and reduced fees across several Bank of America and Merrill services. For many the most appealing feature of Preferred Rewards is the ability to pump up their credit card rewards.

What Cards Are Part of the Preferred Rewards Program?

Many Bank of America consumer credit cards are part of the Preferred Rewards program and are eligible to receive tier-based rewards bonuses. These cards include the Bank of America® Unlimited Cash Rewards credit card, Bank of America® Customized Cash Rewards credit card, Bank of America® Travel Rewards credit card, Bank of America® Premium Rewards® credit card and more.

Credit cards that do not earn rewards and co-branded credit cards, with the exception of the Norwegian Cruise Line World Mastercard, are not part of the Preferred Rewards program. Bank of America co-branded cards include cards offered in partnership with airlines and other brands such as the Alaska Airlines Visa Signature® credit card and Virgin Atlantic World Elite Mastercard®*.

Business credit cards are not eligible for the personal Preferred Rewards program, although Bank of America does have a Business Preferred Rewards program with similar rewards for business customers holding assets with Bank of America and Merrill.

How Do I Join Bank of America Preferred Rewards?

To become a Preferred Rewards client, you must have an eligible Bank of America checking account and hold a three-month combined average daily balance of $20,000 or more in qualifying Bank of America deposit accounts and/or Merrill investment accounts. You can log on to your Bank of America account to see if you meet these qualification requirements. If you do, you can then enroll in the program free of charge.

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While the balance requirements might seem steep, if you consolidate the funds you have in other deposit accounts—for example, money sitting in a checking account, an emergency fund in one savings account and a future house down payment in another savings account—into your Bank of America account, qualifying for the program might not be out of reach.

Another one of the easiest ways to qualify for Bank of America Preferred Rewards, especially if you’re aiming to qualify for the higher rewards tiers outlined below, is by transferring some of your retirement savings to Merrill Edge. Merrill offers both guided investing, which pairs you with an advisor and charges a percentage of your investment portfolio as an annual fee and self-directed investment accounts through Merrill Edge with no annual program fee.

Merrill Edge offers commission-free online stock, ETF and options trades. ETFs, or exchange-traded funds, are investment funds that contain a diversified collection of stocks, bonds and other assets. They are bought and sold on exchanges and often track an index, giving investors an easy, low-cost way to diversify. If you have an individual retirement account such as a Roth IRA or traditional IRA, transferring those assets to Merrill Edge is likely your fastest path toward earning Preferred Rewards status. Company-sponsored retirement accounts such as a 401(k) do not qualify.

Bank of America Preferred Rewards Tiers

The Bank of America Preferred Rewards program offers five tiers: Gold, Platinum, Platinum Honors, Diamond and Diamond Honors. Both the benefits members receive and the combined balance required to qualify increase with each successive tier.

If your balances drop below the Preferred Rewards Tier level you have achieved, you will keep the higher tier level for a full year. After a year plus a three-month grace period you’ll be reassigned to a lower tier based on your current balances.

Gold Tier

Gold is the base tier of the Preferred Rewards program and is available to Bank of America customers who hold a $20,000 to $49,999 three-month combined average daily balance across their Bank of America and Merrill accounts.

The most notable feature of the Gold tier of Preferred Rewards is a 25% reward bonus on eligible Bank of America credit card accounts.

In addition to the above, the Gold tier offers a number of additional discounts and incentives on Bank of America and Merrill products:

  • $200 reduction on the origination fee of a new Bank of America purchase or refinance mortgage
  • 5% interest rate booster on a Bank of America Advantage Savings account
  • 0.125% interest rate discount on a new Bank of America home equity line of credit
  • 0.25% interest rate discount on a new Bank of America auto purchase or refinance loan
  • 1% discount for mobile and online orders of foreign currency, including free standard shipping
  • 0.05% annual program fee discount on Merrill guided investing products

All Bank of America Preferred Rewards tiers include priority member service, no monthly maintenance fees on up to four eligible checking and four savings accounts from Bank of America and no fees on select services including standard check orders, cashier’s checks, incoming domestic wire transfers and more.

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Platinum Tier

The Platinum Tier is available to Preferred Rewards program members who hold between $50,000 and $99,999 in three-month combined average daily balance across their Bank of America and Merrill accounts.

Platinum includes all of the benefits of the Gold tier, but increases the credit card reward bonus to 50% and doubles the annual program fee discount on Merrill guided investing to 0.10%. In addition, the Platinum tier includes up to 12 no-fee non-Bank of America ATM transactions in the U.S. per year.

Many of the additional discounts on Bank of America and Merrill products also increase when you hit the Platinum tier:

  • $400 reduction on the origination fee of a new Bank of America purchase or refinance mortgage
  • 10% interest rate booster on a Bank of America Advantage Savings account
  • 0.250% interest rate discount on a new Bank of America home equity line of credit
  • 0.35% interest rate discount on a new Bank of America auto purchase or refinance loan
  • 1.5% discount for mobile and online orders of foreign currency, including free standard shipping
  • 0.10% annual program fee discount on Merrill guided investing products

Platinum Honors Tier

Preferred Rewards program members who hold between $100,000 and $999,999 in three-month combined average daily balances across their Bank of America and Merrill accounts will receive Platinum Honors status.

Platinum Honors builds on the benefits of the Platinum tier and includes a credit card reward bonus of 75%. Platinum Honors is the sweet-spot for many Bank of America Preferred Rewards program members, as it includes the highest credit card rewards bonus that Bank of America offers. In addition, Platinum Honors clients receive a 0.15% discount on Merrill guided investing and unlimited no-fee ATM transactions within the U.S.

Many of the additional discounts on Bank of America and Merrill products also increase when you hit the Platinum Honors tier:

  • $600 reduction on the origination fee of a new Bank of America purchase or refinance mortgage
  • 20% interest rate booster on a Bank of America Advantage Savings account
  • 0.375% interest rate discount on a new Bank of America home equity line of credit
  • 0.50% interest rate discount on a new Bank of America auto purchase or refinance loan
  • 2% discount for mobile and online orders of foreign currency, including free standard shipping
  • 0.15% annual program fee discount on Merrill guided investing products

Diamond Tier

The Diamond tier includes all of the benefits of the Platinum Honors tier and is offered to Bank of America customers holding between $1 million and $9,999,999 of assets at Bank of America and Merrill.

The additional benefits for the Diamond tier are limited, but the Diamond tier does add a mortgage interest rate reduction on new purchase or refinance mortgages. At the Diamond tier, this interest rate reduction is 0.250%. The Diamond tier also increases the interest rate discount on a new Bank of America home equity line of credit to 0.625%. And if you’re a traveler you will enjoy unlimited ATM transactions worldwide.

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Diamond Honors Tier

The Diamond Honors tier is the highest tier of the Preferred Rewards program, for customers with a combined balance of $10 million or more with Bank of America and Merrill and includes all of the benefits of the Diamond tier. Diamond Honors customers receive a mortgage interest rate reduction of 0.375% and a home equity line of credit interest rate discount of 0.750%.

How To Maximize the Bank of America Preferred Rewards Program

For most consumers, the best way to maximize the Bank of America Preferred Rewards program is to focus on the bonus multiplier that applies to eligible Bank of America credit cards. At the Platinum level or higher, the Preferred Rewards program offers members a 75% bonus on credit card rewards.

For general purchases, the Bank of America® Unlimited Cash Rewards credit card earns 1.5% unlimited cash back on all purchases with a $0 annual fee. When this is multiplied by 1.75, the Bank of America® Unlimited Cash Rewards credit card gives you 2.62% cash back for general purchases, making the Bank of America® Unlimited Cash Rewards credit card arguably the single best credit card for cash rewards on general spending at this time.

If you travel frequently, consider the Bank of America® Premium Rewards® credit card, which offers a base 2 points per dollar on travel and dining purchases and 1.5 points per dollar on all other purchases, making this card a 3.5% cash back card for all travel and dining purchases if you hold Platinum Honors or higher status. While you might be able to eke out better rewards at your specific hotel chain or by using transferable points for international business class flights, few cards can match 3.5% cash back on all travel purchases.

Depending on your financial needs, you might also find value in the reduced mortgage origination fee, home equity discount or the auto loan discount, but make sure that you shop around for rates. Paying a higher interest rate to save $600 in mortgage origination costs on a 30-year mortgage will almost certainly be a bad trade-off.

Bottom Line

If you have $50,000 or more in assets that you can easily move to Bank of America and Merrill and spend a significant amount of money on credit cards, consider going after Bank of America’s Preferred Rewards Platinum status. If you can move $100,000 or more in assets to Merrill, Platinum Honors status combined with the Bank of America® Premium Rewards® credit card will enable you to earn 2.62% cash back on all purchases and 3.5% cash back on all travel purchases.

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