Bank of America® Cash Rewards Credit Card Review: 3% Cash Back Opportunity

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Bank of America is one of the largest banking entities in the United States, so it makes sense that BOA is working to become a serious player in the competitive cash back credit card market. Its latest offering is a card with a unique twist.

The Bank of America Cash Rewards Credit Card lets you choose your own path for earning cash back rewards. If you sign up for this card, you get to pick one spending category that will earn you 3% cash back for the next month. That is supplemented by some 2% cash back categories that Bank of America chooses for you, and the rest of your purchases earn 1% cash back.

And there is even a chance for some existing BOA banking customers to boost their cash back rewards by up to 75%.

But can this card actually earn you more cash back rewards than a card that offers a standard unlimited 2% cash back? That’s one of the questions I’ll try to answer for you in this card review.

I’ve taken a close look at this Bank of America offering to see if it holds up against popular cash back cards like the Citi Double Cash, which is a card you’ll find in money expert Clark Howard’s wallet.


Table of Contents

Team Clark has spent time evaluating the credit card market in several categories including the best cash back credit cards. We’ve compared the Bank of America Cash Rewards to the best cards in this segment of the market. And we’ve determined that it’s a viable choice — thanks to its bonus cash back categories and lack of an annual fee.

As you’re deciding whether this card is a fit for you, please use this review in conjunction with Clark Howard’s 7 Rules for Using Credit Cards.


What Is the Bank of America Cash Rewards Credit Card?

The Bank of America Cash Rewards Credit Card is a cash back credit card that does not charge an annual fee.

The hook for this card is that Bank of America allows you to choose one spending category in which you’ll receive 3% cash back, and you can change that category as often as once a month. This comes in addition to 2% cash back earnings in other categories. The rest of your purchases will earn a 1% cash back reward.

This card also offers a welcome bonus offer on initial spending as well as a 12-month introductory period for 0% APR on new purchases.

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Bank of America Cash Rewards: Specs and Perks

Let’s take a look at the fine print to examine some of the card’s perks and drawbacks:

Cash Back Categories

The cash back rewards for this card range from 1% on everyday purchases up to 3% in one category of your choice.

Bank of America offers you the chance to pick between six popular spending categories for your 3% reward. You can change this category each month via the Bank of America app, so if you’re proactive with your budgeting, you could get the most out of the card by changing to the category in which you anticipate spending the most in the next month.

You’ll also get a standard 2% cash back reward on some select categories. But Bank of America gets to choose those.

Here’s how the rewards program is structured as of this writing:

3% cash back rewards category choices:

  • Gas
  • Online shopping
  • Dining
  • Travel
  • Drug stores
  • Home improvement and furnishings

2% cash back rewards categories:

  • Grocery stores
  • Wholesale clubs

Bank of America caps rewards on the 2% and 3% categories to $2,500 in total spending during a three-month period. After that, you’ll earn 1% cash back until the next quarter. And again, all other purchases earn 1% cash back.

“Preferred Rewards” Members Can Enjoy Increased Cash Back Benefits

If you are a member of the Bank of America Preferred Rewards program, you could see an increase in your bonus opportunities with this card.

This is a program that offers certain customers extra rewards or better rates on a variety of different financial products. And this card is included.

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Here are the minimum requirements for joining the program:

  • An active, eligible Bank of America checking account
  • A three-month combined average daily balance of $20,000 or more in qualifying Bank of America deposit accounts and/or Merrill investment accounts.

If your account qualifies as Gold ($20,000 minimum balance) in the rewards program, you’ll receive a 25% increase in cash back. Platinum ($50,000 minimum balance) status gets you a 50% increase. And Platinum Honors, which requires a $100,000 minimum balance, offers a 75% increase in cash back rewards.

Bank of America offers this example of how it works: “A $100 purchase that earns 3% ($3.00) will actually earn $3.75, $4.50 or $5.25 based on your tier when the purchase posts to your account.”

I’ll compare how these rates can stack up against other credit card rewards programs later in the article.

More Cardholder Benefits

  • Welcome Bonus Offer: Bank of America has assigned a fairly easy-to-achieve welcome bonus to this card. You can earn $200 in cash back rewards if you spend $1,000 or more within the first 90 days of card membership.
  • Introductory APR Period: This card comes with 0% APR on all new purchases for the first 12 billing cycles. After that period, any leftover balance will be subject to interest charges at your assigned APR.

Cardholder Fees

Here’s a quick look at some of the fees you may encounter with the Bank of America Cash Rewards Card:

  • Annual Fee: None
  • Balance Transfer Fee: $10 or 3% of the total advance, whichever is greater
  • Cash Advance Fee: $10 or 3% of the total advance, whichever is greater
  • Foreign Transaction Fee: 3% of the U.S. dollar amount of each transaction
  • Late Payment Fee: Up to $40

Bank of America Cash Rewards vs. Citi Double Cash

If you’re considering a cash back credit card, you’re likely looking for a card that’s going to optimize your rewards based on your spending habits.

To help determine if the Bank of America Cash Rewards Credit Card is actually your best option, I compared this card to the Citi Double Cash.

Spending Comparison

The Citi Double Cash, which gives unlimited 2% cash back on all purchases (1% when you buy, 1% when you pay your bill), is one of money expert Clark Howard’s favorite credit cards. It has no annual fee and no bonus categories, so the math is pretty straightforward on your spending.

The Bank of America Cash Rewards, on the other hand, is not so easy to nail down for the purposes of a spending comparison. First, you need to estimate your spending on the 3% category. Next, you have to determine if you’re eligible for the Preferred Rewards bonuses based on the amount of money you may have in qualifying accounts at the time of your spending.

For the purposes of this comparison, I’ll set the following parameters:

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  1. Since Bank of America caps cash back rewards bonuses each quarter, the analysis will be based on quarterly spending.
  2. We’ll assume that spending is done to max out that quarterly bonus in your chosen 3% category plus Bank of America’s assigned 2% categories.
  3. For simplicity’s sake, we’ll assume that you spend $1,500 ($500 per month) in your chosen 3% category, and then a combined $1,000 in the 2% categories. This will max out your $2,500 in spending eligible for bonuses on the Bank of America card.

Scenario #1: $3000 in Quarterly Spending

If you spend $1,500 in your chosen 3% category, $1,000 in Bank of America’s 2% categories and $500 on everything else, here are the results:

Citi Double Cash: $60 cash back (2%)
Bank of America Cash Rewards: $70 cash back (effective 2.3%)

Bank of America Cash Rewards are slightly more valuable than Citi Double Cash in this scenario.
BankofAmerica.com

Scenario #2: $6000 in Quarterly Spending

If you spend $1,500 in your chosen 3% category, $1,000 in Bank of America’s 2% categories and $3,500 on everything else, here are the results:

Citi Double Cash: $120 cash back (2%)
Bank of America Cash Rewards: $100 cash back (effective 1.67%)

Citi Double Cash is more valuable than Bank of America Cash Rewards in this scenario.
BankofAmerica.com

You can do your own calculations for a spending scenario using Bank of America’s cash back estimating tool.


Final Thoughts

Are you considering adding the Bank of America Cash Rewards to your wallet? Let’s review some of the major pros and cons of the card before you make your final decision:

Bank of America Cash Rewards: Pros and Cons

Pros Cons
Earn 3% cash back in a category of your choice Only 1% cash back in many spending categories
$200 welcome bonus opportunity Cash back reward bonuses capped at $2,500 in spending per quarter
0% APR on new purchases for 12 months Must have minimum of $20,000 balance in qualifying accounts to access increased rewards offer

Bottom Line: If you are an existing Bank of America customer who has access to the bank’s Preferred Rewards program, you may want to inquire about the potential for boosts to the cash back offerings on this credit card.

Otherwise, the offered 3% cash back reward category choice is probably not going to provide enough benefit to make this card better than an unlimited 2% cash back offering. While the ability to change your 3% spending category each month is helpful, it still will take a great deal of budgeting and maybe even some guesswork to ensure you get the most out of it.

Money expert Clark Howard hates banking with big banks, so he would advise against opening a Bank of America account just to get the cash back boost provided by the Preferred Rewards program.

And he also really enjoys the certainty of the rewards structure on his Citi Double Cash. So if you’re looking to follow his lead, this card is probably a “pass” for most consumers.

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Do you have experience with the Bank of America Cash Rewards Credit Card? Let us know how you like it in the comments below!

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