Bank of America Cash Rewards Credit Card Review: Is It Right for You?
The Bank of America Cash Rewards Credit Card gives you three different levels of cash-back bonuses depending on the purchase you make, along with a robust $200 sign-up bonus.
What makes the card relatively unique among cash back cards is that you have the ability to choose which type of purchase gets the card’s best cash back rate. In this sense, it offers a level of customization you can’t find with other popular cash back credit cards.
That being said, you have to use the card in the right way in order to maximize its rewards. In this review, we’ll show you how to do that by breaking down how the card’s rewards work, what its rates and fees are, and how it compares to the top cash rewards credit cards.
Pros: 3x bonus on dining and an excellent sign-up bonus of $200.
Cons: Penalty APR, low yearly rewards.
Estimated Yearly Cash Rewards: $422
|Sign-Up Bonus||Annual Fee||Regular APR|
|$200||$0||16.24% to 26.24%|
|Rewards Rate: 3x on dining, 2x on groceries and warehouse clubs, 1x on everything else|
As we mentioned in the introduction to this review, the Cash Rewards offers three tiers of cash-back bonuses. Every time you make a purchase, Bank of America processes the rewards based on the type of purchase you make. Then, they automatically deposit those rewards to a rewards balance you can view in your Bank of America account.
The most lucrative tier of rewards is the 3% tier. However, unlike other credit cards that determine which category of purchases get 3% cash back, you get to pick one category from the following list:
- Online shopping
- Drug stores
- Home improvement
When we calculate the Cash Rewards’ yearly cash back totals, we’ll use the dining category because, according to the Bureau of Labor Statistics, that’s the category out of the six listed above in which the average household spends the most each year: $3,365.
Based on the averages, choosing “dining” as your 3% category means you can earn around $101 a year.
However, you may not eat out that often and dining may not be your most lucrative 3% category. If you’re doing renovations in your home, for example, home improvement may be the most lucrative category.
Alternatively, if you deal with health issues and you have to spend more than the average amount of money each month on prescriptions from drug stores, the drug-store category may be the best fit.
To narrow down which one will work best, take a few minutes to look over your purchases from the past few months. If your online banking doesn’t give you options for narrowing down transactions by category, consider signing up for a budgeting app like Mint that will automatically categorize transactions for you.
The next tier of bonus purchases includes warehouse clubs and groceries. According to our research, we believe this category of purchases can earn you around $90 a year if you don’t shop at wholesale clubs and around $115 if you do.
We will base our rewards calculations on you not having a membership because not everyone has a warehouse club membership and some of those who have them rarely use them.
The final rewards tier is the 1% bonus, which applies to nearly every purchase not included in the 3% and 2% tiers. These 1% purchases can earn you around $232 a year, bringing this card’s yearly cash-back total to around $422.
The card provides one other way to earn cash back: a $200 sign-up bonus. Bank of America will automatically add $200 to your rewards balance if you can spend $1,000 on the card within the first 90 days of owning it.
The card’s fine print says it will take eight to 12 weeks for the $200 to appear in your rewards balance.
You can redeem your rewards balance by adding a dollar amount to your credit card statement as a credit. You can also transfer it to your Bank of America checking or savings account, as well as B of A investment and 529 accounts.
Pro tip: Bank of America limits your 3% and 2% to the first $2,500 you spend each quarter. In other words, $75 is the most you could earn every three months in the bonus categories.
Understanding how this card’s rates and fees work is an important part of the daily experience of using it. We also think it’s crucial to understand how much this card can cost you because interest payments and other fees could cost you more than what you earn in cash back.
Here’s a list of the card’s most pertinent interest rates (“APR”) and fees:
- Interest rate for purchases and balance transfers: 16.24% to 26.24%
- Interest rate for cash advances: 19.24% to 27.49%
- Penalty interest rate: 29.99%
- Balance transfer/cash advance fee: $5 or 3%, whichever is greater
- Late payment fee: Up to $39
- Returned payment fee: Up to $28
- Annual fee: $0
As we’ll point out in the next section, this card’s lowest APR and highest APR are high compared to other cards. Bank of America calculates your interest rate based on your credit scores. At 700 or higher, there’s a good chance you’ll get the card’s lowest APR. When your credit scores are below 700, the APR will get higher the farther you move from 700.
To give you an idea of what these interest rates mean in real life, we’ve made a chart that shows how much interest you’ll pay per year on average daily balances ranging from $1,000 to $5,000. While we can’t say for certain which interest rates B of A gives between 16.24% and 26.24%, we included 20.24% to give you a sense of how much a mid-range APR would cost you:
|Daily Balance||16.24% APR for one year||20.24% APR for one year||26.24% APR for one year|
Notice that as soon as you start carrying a balance of $3,000 with the lowest APR, the interest you pay will likely exceed the cash rewards you earn. The higher your APR, the lower the balance it will take for your yearly interest to exceed your yearly cash rewards.
Maximizing the Cash Rewards card starts with good budgeting. Before you sign up for this card, take some time to look at your spending habits and your income. Are you spending more than you earn? If that’s the case then, eventually, you’ll have a balance on this card through which you’ll pay more in interest than you’ll earn in rewards.
One other fee we want you to watch out for is the 29.99% penalty APR. Bank of America will apply this APR to your account permanently if you make a single late payment. Any future increases in your balance will get this APR. So, if you have a $3,000 balance when you get the penalty APR and that balance goes up to $4,000 in two months’ time, that extra $1,000 will get the penalty APR.
Pro tip: Any balance transfers you make in the first two months of owning the card will have no interest charges for 12 months. Any purchases you make during that time won’t have interest charges, either.
Not every cash rewards card works like the Bank of America card does. In fact, there is a lot of variation between the best cash back cards of 2019. The following chart helps you see the differences and similarities between the top cards:
|Bank of America Cash Rewards||AmEx Blue Cash Preferred||Discover It Cash Back||Citi Double Cash||Capital One Quicksilver||Chase Freedom Unlimited||Chase Freedom|
|Intro cash offer||$200 after $1,000 spend||$200 after $1,000 spend||Match on first-year cash back (avg. of $425)||None||$150 after $500 spend||Match on first-year cash back up to $20,000 (avg. of $300)||$150 after $500 spend|
|Rewards rates||3%/ 2%/ 1%||6%/ 3%/ 1%||1% with 5% quarterly bonuses||2%||1.5%||1.5%||1% with 5% quarterly bonuses|
|Yearly rewards on $30K spending||$422||$605||$425||$600||$450||$450||$425|
|Intro APR||0% for 15 months on purchases and balance transfers||0% for 12 months on purchases and balance transfers||0% for 14 months on purchases and balance transfers||0% for 18 months on balance transfers||0% for 15 months on purchases and balance transfers||0% for 15 months on purchases and balance transfers||0% for 15 months on purchases and balance transfers|
|Permanent APR||16.24%–26.24% (Penalty APR up to 29.99%)||15.24%–26.24% (Penalty APR up to 29.99%)||14.24%–25.24%||14.49%–24.49% (Penalty APR up to 29.99%)||16.24%–26.24%||17.24%–25.99%||17.24%–25.99%|
What this chart reveals is that the Bank of America Cash Rewards card has an above-average sign-up bonus at $200, putting it on par with the Blue Cash Preferred Card from American Express but behind the Discover it Cash Back and the Chase Freedom Unlimited.
The card’s yearly rewards are lower than every other card. In fact, it’s about $180 behind the Citi Double Cash and $90 behind the AmEx card.
Now, as we mentioned earlier, the Cash Rewards card offers you the distinct advantage of choosing your 3% rewards category. The other cards on this list choose those extra bonuses for you. For example, the Chase Freedom gives you a 5% rate but only on categories they choose and those categories change every three months.
Another important point of comparison is APR. As the chart shows, the Bank of America card’s range of interest rates is the highest in the group along with the Quicksilver from Capital One.
In general, we think the Bank of America card lags behind the other cards in the chart in several of the important categories.
This card’s main strength is that it gives you the freedom to choose the spending category that gets the 3% rewards rate. Also, research shows that the Cash Rewards sign-up bonus is above average.
However, we think there are numerous drawbacks to this card. In our opinion, the penalty APR makes this card a poor fit for someone who tends to rack up balances and pays late. If that’s you, there’s a good chance your balances will have, eventually, a 29.99% interest rate.
Second, we don’t think that this card is a good fit for families, mainly because its best bonus doesn’t favor the what may be the biggest expense for families that can be paid with a credit card: groceries.
That being said, we think this card is an excellent fit for you if you tend to spend more than the average household on groceries and one of the bonus categories we listed earlier. However, Bank of America tempers those bonus categories. They limit your 3% and 2% rewards to the first $2,500 you spend.
We believe, in general, if you’re someone who doesn't pay late and rarely carries a balance, the Citi Double Cash might be the best card for your spending.
Best card around
I have been a card holder for 16 years and have always received excellent service!
Bottom Line: Yes, I would recommend this to a friend
Good luck getting bonus cash
Unlike Citibank or Chase, who's bonus cash works promptly, I am unclear if I will ever get my bonus from Bank of America. I spent the money and more in the allotted time. The fine print says I will get maybe in three months? No indication on my account that this will ever happen.
All others I have used gave the bonus as soon as you met the goals for the bonus offer.
I will get rid of this card and will be going back to others.
Bottom Line: No, I would not recommend this to a friend