All about Bank of America Preferred Rewards: Get up to 2.62% everywhere or 5.25% in categories.

Bank of America Preferred Rewards is a relationship banking program that offers a variety of reward incentives, including increased credit card rewards, for increasing your banking relationship with Bank of America.

If you hold $100,000 or more in assets with Bank of America and Merrill, you can get a 75% bonus on your credit card rewards on certain cards. That means you can earn 2.62% everywhere with an Unlimited Cash Rewards card or up to 5.25% in categories like gas and EV charging, online shopping, streaming, dining, travel, drug stores, and home improvement stores.

Here’s what you need to know about BofA Preferred Rewards.

Why pursue Bank of America Preferred Rewards

For most people reading this site, the reason to pursue Bank of America Preferred Rewards comes down to the 75% credit card rewards boost with Platinum Honors. This reward bonus applies across Bank of America’s cash and point-earning bank-branded credit cards:

• Customized Cash Rewards
• Unlimited Cash Rewards
• Travel Rewards
• Premium Rewards
• Premium Rewards Elite

Preferred rewards bonuses for all cards

Here’s what the increased rewards look like across the eligible Bank of America personal credit cards.

As you can see in the above table, the rewards boost turns Bank of America’s cash back and point-earning credit cards from a fairly middling lineup into offering best-in-class rewards on general purchases and in select categories.

Other benefits of Bank of America Preferred Rewards

While likely less interesting to readers of this site, Bank of America Preferred Rewards offers some additional benefits across its other products and services. Amounts of discounts, fee reductions, and rate boosts vary by Preferred Rewards tier.

Here are some of the other benefits offered by Bank of America Preferred Rewards:

• Savings interest rate boost.
• Lowered fees on select banking services.
• Reduced origination fees on mortgages and refinances.
• Interest rate discounts on home equity and auto loans.
• Exchange rate discount on foreign currency orders.
• No monthly maintenance fees on eligible checking and savings accounts.
• Fee discounts for Merrill guided investing
• No-fee ATM transactions.
• Lifestyle benefits and no international transaction or ATM fees. (Diamond tier customers only.)

How to qualify for Bank of America Preferred Rewards

You qualify for Bank of America Preferred Rewards based on your three-month average combined balance across all of your Bank of America deposit accounts and Merrill investment accounts. You must also have an active, eligible Bank of America Checking account.

• $20,000 to $49,999.99 of deposits qualifies you for the Gold tier.
• $50,000 to $99,999.99 of deposits qualifies you for the Platinum tier.
• $100,000 to $999,999.99 of deposits qualifies you for the Platinum Honors tier.
• $1,000,000 or more deposits qualifies you for the Diamond tier.

One detail that is sometimes missed is that you qualify based on your three-month average combined balance. If you deposit $100,000 in a Bank of America checking account, you’ll need to hold that entire amount in your accounts for three months before qualifying for Platinum Honors Tier.

Merrill Edge investments: The best way to qualify

Holding $100,000 in a Bank of America checking or savings account earning a paltry interest rate isn’t a great way to park your $100,000. And, of course, that assumes that you have $100,000 of liquid cash to park with Bank of America.

However, your balances with Merrill investment accounts can also qualify you for Premium Rewards. And retirement accounts will qualify. If you have at least $100,000 in an investment account (including a retirement account) that you can move to Merrill, you can use that to qualify for Premium Rewards at the Platinum Honors tier.

Here’s why I think that having a Merrill Edge self-directed investment account is the best way to qualify for Premium Rewards with Platinum Honors:

• Retirement accounts qualify. You can transfer a Roth or Traditional IRA to Merrill Edge or roll over a previous employer’s 401k account. Your retirement balance can qualify you for Premium Rewards.
• Merrill Edge self-directed accounts are relatively low cost. If you choose a self-directed account, you can avoid management fees and fees for investment advice you probably don’t need. Merrill Edge self-directed accounts offer $0 stock, ETF, and option trades.
• Merrill Edge offers index ETFs. My investment strategy involves investing in index funds. I don’t believe that I can outperform the market on average in the long run, but I can impact my returns by reducing fees and investing in index funds. Merrill Edge offers investments that mesh with this strategy.

How to enroll in Preferred Rewards

Enrolling in Preferred Rewards is simple. Once you’ve achieved at least a $20,000 3-month average combined balance across your Bank of America and Merrill accounts, you will see an option to enroll in the program when you log into your account online. You can also enroll through the mobile app.

If you don’t find the option online, you can call Bank of America customer service, who can help you find where to enroll on the website if you are eligible. When you call Bank of America customer service, the customer service representatives actually have the ability to log into the site with you and see what you see as you navigate the site.

Downsides of the Preferred Rewards program

Bank of America Preferred Rewards is a great program, but the program does have some downsides. Here are a few things to think about before jumping on the Preferred Rewards bandwagon.

Not every investment is offered by Merrill. I very much prefer to invest in mutual funds so that I can make automatic investment contributions and have dividends reinvested automatically. This isn’t possible (at least not with low-cost index mutual funds) with Merrill Edge. Index fund ETFs are an acceptable alternative that provides a low-cost solution, but I do have to occasionally log into my account and purchase additional shares manually with the cash that accumulates in my account.

The benefits of Bank of America’s cards are lackluster. While the cash back rewards of Bank of America’s credit cards become best-in-class once you have a 75% rewards boost, the cards don’t offer much in the way of additional benefits. You’ll probably want a no-annual-fee card from another bank that offers consumer insurance benefits like extended warranty, purchase protection, and cell phone protection. And if you travel, you may want to pick up a card with decent trip insurance and rental car insurance.

The bank’s IT lags other banks. I’ve found that transaction downloads and integrations with the software I use to manage my accounts to be unreliable. And setting up automatic payments on credit cards with Bank of America is a frustrating process.

Bottom line

Bank of America Preferred Rewards is likely worth pursuing if your credit card rewards strategy involves maximizing your cash back. You’ll be able to earn best-in-class rewards across a variety of categories, plus 2.62% cash back on all purchases.

Frequently asked questions