Everything you should know about Bank of America’s Preferred Rewards program
While it's wonderful to redeem your points and miles for travel arrangements, such as lodging and flights, there can be many other expenses involved in planning a trip, such as car rentals, train tickets, gas and campsite fees. Luckily, using cash-back rewards in combination with your points and miles can save you even more money on your next vacation.
With that in mind, let's examine the often-overlooked Bank of America Preferred Rewards® program. On top of the simple banking benefits members can expect, consolidating your finances with Bank of America can also boost your cash-back earnings with some of the best Bank of America credit cards.
That's because Bank of America designed its Preferred Rewards program to incentivize consumers to move their checking, savings, investment and retirement accounts to Bank of America and Merrill. The higher your balance of total assets with the bank, the more perks you can unlock, including with its credit cards. Depending on your holdings and the type of rewards you're looking to accumulate, it might be time to stop ignoring Bank of America Preferred Rewards.
Bank of America Preferred Rewards Program
How to qualify for Bank of America's Preferred Rewards Program
To qualify for the Bank of America Preferred Rewards program, you must have both of the following:
- 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
There are five Preferred Rewards tiers. You'll qualify for each based on your combined average daily balance:
- Gold: $20,000 or more in total assets
- Platinum: $50,000 or more in total assets
- Platinum Honors: $100,000 or more in total assets
- Diamond: $1,000,000 or more in total assets
- Diamond Honors: $10,000,000 or more in total assets
While not exorbitant, even the lowest level requires some pretty high figures. But don't throw in the towel straight away. If you have an emergency fund, a holiday account, a savings account and a checking account, combining all those balances may qualify you for a Preferred Rewards tier. Once you add in investment accounts, such as IRAs, you may even find that the Platinum or Platinum Honors tiers are within reach.
Your balance doesn't need to originate with Merrill or Bank of America to count toward each threshold. You can roll existing IRAs and investment accounts over to Merrill or Bank of America and immediately use those balances to begin establishing a three-month average to boost your tier. Of course, you'll have to consider other things like account management fees and available investment options to decide whether doing so is a good option.
How to move among Preferred Rewards tiers
You can rise from one rung to the next any month after your average daily balance for the three previous months reaches the threshold for the following tier. Once you reach a specific status level, you won't need to keep all your cash in the Bank of America basket. Instead, you'll maintain your Preferred Rewards tier status for a full year. If you no longer meet the qualification requirements after that year, you have a three-month grace period to do so. If you still don't meet the criteria after the three-month grace period, you'll either be moved to a lower tier or completely lose your Preferred Rewards benefits.
Benefits of Bank of America's Preferred Rewards Program
Here's a chart of the five Preferred Rewards tiers, along with the associated benefits of each:
| Benefit | Gold | Platinum | Platinum Honors | Diamond | Diamond Honors |
|---|---|---|---|---|---|
| Credit card rewards bonus | 25% | 50% | 75% | 75% | 75% |
| Savings interest rate booster | 5% | 10% | 20% | 20% | 20% |
| Mortgage perks | $200 origination fee reduction | $400 origination fee reduction | $600 origination fee reduction | 0.250% interest rate reduction (when PayPlan is established) | 0.375% interest rate reduction (when PayPlan is established) |
| Auto loan interest rate discount | 0.25% | 0.35% | 0.50% | 0.50% | 0.50% |
| Home equity interest rate discount | 0.125% | 0.250% | 0.375% | 0.625% | 0.750% |
| No-fee banking services | Included | Included | Included | Included | Included |
| Free non-Bank of America ATM transactions | N/A | 12/yr | Unlimited in the U.S. | Unlimited in the U.S. and internationally | Unlimited in the U.S. and internationally |
| Merrill Guided Investing fee discount | 0.05% | 0.10% | 0.15% | 0.15% | 0.15% |
| Foreign currency exchange rate discount (for mobile and online orders only, includes free standard shipping) | 1% | 1.5% | 2% | 2% | 2% |
| Access to exclusive lifestyle benefits | N/A | N/A | N/A | Yes | Yes |
Now, let's take a closer look at each of these benefits.
Savings Interest Rate Booster
You need to have a Bank of America Advantage Savings account and be an enrolled Preferred Rewards member to enjoy this benefit. If you have an existing savings account, it will not automatically convert to a Bank of America Advantage Savings account when you enroll in Preferred Rewards. Be sure to request the conversion when joining Preferred Rewards.
At Gold, the interest rate boost is 5%. That likely sounds better than what it is. As an example, if your interest rate is 1.00%, a 5% rate booster would increase the interest rate to 1.05%. Here's the current annual percentage yield on a Bank of America Advantage Savings account for a sample Florida resident to give you some perspective:
You can check how this boost would affect the current annual percentage yield on a Bank of America Advantage Savings account in your region here.
Credit card rewards bonus
Preferred Rewards members earn a 25%, 50% or 75% rewards bonus on select Bank of America cards. For credit cards that earn points or cash rewards, you will receive a rewards bonus on every purchase. Your earning rate is based on your Preferred Rewards tier when the purchase is posted to your account. We'll get into how this plays out with specific cards below.
You can earn the Preferred Rewards bonus on most Bank of America consumer-branded credit cards, including the Bank of America® Premium Rewards® credit card, the Bank of America® Travel Rewards credit card, the Bank of America® Unlimited Cash Rewards credit card and the Bank of America® Customized Cash Rewards credit card, among others.
Related: Chase Sapphire Preferred vs. Bank of America Travel Rewards — which should beginner travelers get?
Mortgage origination fee reduction
Any time you can cut down on fees for buying or refinancing a home, you should. Preferred Rewards members are eligible to receive a fixed reduction in one of two ways, depending on your membership tier:
- A dollar amount off your origination fee (not to exceed its price)
- A percentage off your mortgage APR
The Preferred Rewards fee reduction isn't transferable. And you may not be able to combine this fee reduction with other discounts.
Auto loan interest rate discount
You must complete an auto purchase finance or refinancing loan through Bank of America to qualify for a rate discount. This benefit is not transferable, so only the Preferred Rewards member can take advantage of this perk.
Of course, you'll need to make sure that Bank of America offers the most competitive rate after the discount. Otherwise, it might not be worth pursuing. Even a quarter of a percent could save or cost you thousands of dollars over the life of the loan.
Home equity interest rate discount
You can get a home equity line of credit interest rate discount of up to 0.75%, depending on your Preferred Rewards status level. This benefit is non-transferable, but you may be able to combine this perk with other home equity interest rate discounts. And even co-borrowers are eligible as long as at least one applicant is enrolled or eligible to enroll.
No-fee banking services
- ATM/Debit card rush fees
- ATM international transaction fee
- Monthly maintenance fees on up to four eligible checking and four savings accounts from Bank of America
- Non-Bank of America ATM fees for withdrawals, transfers or balance inquiries
- One overdraft protection transfer fee waived per billing cycle
Additionally, Platinum and above incur no fees for incoming international wire transfers and can open a small safe deposit box for free at a Bank of America branch.
Free non-Bank of America ATM transactions
In the U.S. and U.S. territories, Platinum and Platinum Honors members:
- Won't be charged non-Bank of America ATM fees
- Will receive a refund of the ATM operator or network fee for withdrawals, balance inquiries and balance transfers
Platinum members receive one free transaction per statement cycle (up to 12 annually), and Platinum Honors members have no cap. Meanwhile, Diamond and Diamond Honors members have unlimited no-fee transactions both in the U.S. and internationally.
Related: 7 ways to save on overseas ATM withdrawals
Merrill Guided Investing fee discount
Preferred Rewards members enjoy a fee discount when utilizing Merrill Guided Investing services. You can get started with as little as $1,000 for Merrill Guided Investing or $20,000 for Merrill Guided Investing with an adviser.
Merrill Guided Investing typically charges a fee of 0.45% of assets under management, and Merrill Guided Investing with an advisor typically charges a fee of 0.85% of assets under management. While those fees might seem small, they add up over time. As such, these charges can become a compound drain on your investments as they increase. So, it may be best to look for a financial advisor that charges a fixed fee instead of a percentage of your assets.
Foreign currency exchange rate discount
All Preferred Rewards members will get some form of discount for foreign currency orders through online banking or the mobile banking app. Depending on your status tier, you'll receive a discount between 1% and 2%.
Access to exclusive lifestyle benefits
Top-tier Diamond and Diamond Honors members will enjoy customized and unique lifestyle experiences, such as travel, wellness, events, food and drink or other personal services. You can get a preview of some of these curated offers here.
How to maximize cash-back earnings with Bank of America credit cards and Preferred Rewards
To maximize the Bank of America Preferred Rewards program, you'll want to qualify for at least Platinum Honors and be eligible for the 75% bonus on your credit card rewards. Of course, it's not a great idea to make big investment and banking decisions based entirely on credit card bonuses. However, it may be worthwhile if you already plan to invest in Merrill and have an existing banking relationship with Bank of America. If you do, here are some of the bank's rewards cards to consider and how you can maximize your cash-back earnings.
Bank of America Premium Rewards credit card
The Bank of America® Premium Rewards® credit card is an excellent rewards credit card in its own right. But it gets even more competitive when you add in the bonuses from the Preferred Rewards program.
The card charges a $95 annual fee and offers a modest selection of benefits. For example, cardholders get an up-to-$100 annual airline incidental fee statement credit, a Global Entry or TSA PreCheck application fee credit every four years (up to $100) and some decent travel protections.
However, this card shines with its earning rates on everyday spending as well as travel and dining purchases. Here's how the earning rates stack up once you consider the Preferred Rewards credit card rewards bonus:
| Spending categories | Regular cardholder | Preferred Rewards Gold (25% bonus) | Preferred Rewards Platinum (50% bonus) | Preferred Rewards Platinum Honors, Diamond and Diamond Honors (75% bonus) |
|---|---|---|---|---|
| Travel and dining | 2 points per dollar spent | 2.5 points per dollar spent | 3 points per dollar spent | 3.5 points per dollar spent |
| Everything else | 1.5 points per dollar spent | 1.875 points per dollar spent | 2.25 points per dollar spent | 2.625 points per dollar spent |
The ability to get at least 2.625% on all purchases with this card (for high-tier Preferred Rewards members) is incredible. This return makes the Bank of America® Premium Rewards® credit card one of the best credit cards for everyday spending.
Related: Not to be underestimated: Bank of America Premium Rewards credit card review
Bank of America Travel Rewards credit card
If you want to avoid paying credit card annual fees, you could opt for the Bank of America Travel Rewards credit card. The card earns 1.5 points per dollar spent on all purchases. Points can be redeemed to cover travel expenses at a rate of 1 cent per point.
By earning 1.5 points per dollar spent on everything plus a 75% Preferred Rewards bonus as a Platinum Honors (or higher) Preferred Rewards member, you effectively earn 2.625% cash back toward travel purchases made with the card. That's a fantastic cash-back rate to earn on all spending — especially for a card with no annual fee.
Related: Bank of America Travel Rewards card: Simplicity for points beginners
Bank of America Unlimited Cash Rewards credit card
The Bank of America® Unlimited Cash Rewards credit card is great for folks who don't want to keep track of multiple bonus categories, but who still want to earn at a strong fixed rate on all their purchases. This no-annual-fee credit card earns unlimited 1.5% cash-back rewards on all purchases with no limit.
Platinum Honors and higher members would get back 2.625% on all your purchases — one of the best rewards rates any card offers for non-bonus everyday purchases.
Related: The best Bank of America cards of 2024
Bank of America Customized Cash Rewards credit card
Another no-annual-fee card is the Bank of America® Customized Cash Rewards credit card. It earns 3% in one of the following categories of your choice each calendar month:
- Gas and EV charging stations
- Online shopping (including cable, streaming, internet and phone services)
- Dining
- Travel
- Drugstores/pharmacies
- Home improvement/furnishings
It also earns 2% back at grocery stores and wholesale clubs and 1% back on everything else. Just note that you can only earn 3% and 2% on up to $2,500 in combined purchases each quarter (then 1%).
So, if you're at least a Platinum Honors member, you'll earn up to a whopping 5.25% cash back on your 3% category. You'd also earn up to 3.5% cash back at grocery stores and wholesale clubs and 1.75% cash back on all other purchases. That's pretty phenomenal for a no-annual-fee cash-back rewards card.
How to convert your Bank of America points to cash
Several Bank of America credit cards earn straight-up cash. But some earn "points," which you can trade for cash.
To redeem your Bank of America points with a card like the Premium Rewards card, you'll find a "cash" option within your online account. This allows you to request a statement credit or a cash deposit into your Bank of America checking or savings account (or eligible Merrill Edge and Merrill Lynch accounts) at a rate of 1 cent per point. Note that you can also redeem into a 529 College Savings Plan.
Additionally, the Travel Rewards card earns a slightly different rewards currency. You can redeem them as a direct deposit into your Bank of America checking or savings account or as a credit into an eligible Merrill Cash Management Account — but you'll usually get a paltry value of 0.6 cents per point. You'll only achieve a value of 1 cent per point when offsetting a travel-related transaction on your card.
Bottom line
The Bank of America Preferred Rewards program is probably not worth pursuing unless you qualify for at least Platinum Honors to maximize the 75% bonus on credit card earnings. That said, the program's perks mean that if you already do business with Bank of America or Merrill, you should consider consolidating your banking and investing to boost your rewards and benefits.
It might even be worth switching to Bank of America if doing so won't cost you anything extra. After all, the Preferred Rewards program can tip the scale on some of Bank of America's top card offerings and reward you with significant discounts on other banking services like mortgage and auto loans.