What A Year of Earning With the Bank of America Premium Rewards Card Can Get You

Oct 3, 2017

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Any time a new travel rewards credit card hits the market, it tends to cause a bit of a frenzy. For many points and miles enthusiasts, the main thing they want to know is how it compares to the other cards in their wallet. However, many readers may just be getting into the hobby and looking for a card with a simple yet rewarding value proposition, and earlier this month they got just that with the introduction of the Bank of America Premium Rewards credit card. Today I want to go through exactly how rewarding this card can be in your first year of card membership.

Sign-Up Bonus and Benefits

Before getting into the numbers, let’s quickly review the key benefits of this new card. The card is currently offering a sign-up bonus of 50,000 bonus points after spending $3,000 in the first 90 days of account opening, worth $500 toward any purchase you make on the card. It also offers 2 points per dollar spent on travel and dining purchases and 1.5 points per dollar spent everywhere else. However, these rates are boosted for customers enrolled in Preferred Rewards. You’re eligible for this program if you have:

An eligible Bank of America personal checking account AND a 3-month average combined balance of $20,000 or more in a Bank of America account and/or Merrill Edge or Merrill Lynch investment accounts.

If you qualify, the exact earning rates depend on just how large your balance is, but for loyal Bank of America customers, it can be quite rewarding:

Spend Categories Regular Cardholder Tier 1 – Gold
($20,000 – $50,000)
Tier 2 – Platinum
($50,000 – $100,000)
Tier 3 – Platinum Honors
Travel and Dining 2 points per $ 2.5 points per $ 3 points per $ 3.5 points per $
Other Purchases 1.5 points per $ 1.875 points per $ 2.25 points per $ 2.625 points per $

However, the earning rates on the card are just the start. The card also comes with some additional benefits that can easily cover the $95 annual fee:

  • $100 annual airline credit, which can be used to cover purchases like seat upgrades, baggage fees or in-flight purchases (though it won’t cover airfare)
  • Global Entry/TSA PreCheck credit, which can be used once every four years to cover the membership fee for either Global Entry or TSA PreCheck
  • No foreign transaction fees
  • Various coverage and protections, including trip cancellation insurance (up to $5,000), baggage delay coverage ($100 per day for up to five days) and purchase protection (up to $10,000)

Value in the First Year

NEW YORK, NY - SEPTEMBER 16: One of the first customers to buy a new iPhone walks out of an Apple store in Manhattan on September 16, 2016 in New York City. People around the globe waited in long lines to be among the first to purchase both the iPhone 7 and the iPhone 7 Plus. The phones offer longer battery life, faster browsing, a better camera and do not have a traditional headphone jack. (Photo by Spencer Platt/Getty Images)
The card offers solid earning rates on all purchases plus the flexibility to redeem your points for any purchase. Image by Spencer Platt via Getty Images.

So given these benefits, how much value can you get from the Premium Rewards Card? For this analysis, I’ll follow a similar format that I used in previous “earning and burning” analyses for cards like the Chase Sapphire Reserve and Alaska Airlines Visa Signature credit card. While your exact earnings will depend on your spending patterns, I’ll use consumer expenditure data from the Bureau of Labor Statistics for the most recent year available (2015) to estimate what the “average” household would spend (and thus earn) on the Premium Rewards Card in the first year.

In doing so, I made the following assumptions:

  • Only the “Other lodging” category under “Shelter” can easily be paid with a credit card (since you’ll pay a fee for paying most mortgage and rent payments with credit cards), and these transactions earn 2x points as travel purchases.
  • The “Vehicle purchases” category under “Transportation” can’t be paid with a credit card, but all other transportation expenses can.
  • 50% of the “Healthcare” category consists of premiums (charged through paycheck deductions) and thus can’t be paid with a credit card.
  • All “Personal insurance and pensions” expenditures can’t be paid with a credit card.
  • All other expenses (including “Entertainment” and “Education”) can be paid with a credit card.

Again, your situation may differ substantially, so feel free to adjust these assumptions in order to calculate your own earning potential.

Here’s a quick table that shows how these spending patterns in the first year of cardmembership translate to points on the Premium Rewards Card:

Category Spending Earning Rate Points
Sign-up bonus N/A N/A 50,000
Food at home $4,015 1.5 points/$ 6,022.5
Food away from home $3,008 2 points/$ 6,016
Alcoholic beverages $515 1.5 points/$ 772.5
Housing (other lodging) $730 1.5 points/$ 1,095
Utilities, fuels and public services $3,885 1.5 points/$ 5,827.5
Household operations $1,309 1.5 points/$ 1,963.5
Housekeeping supplies $655 1.5 points/$ 982.5
Household furnishings and equipment $1,818 1.5 points/$ 2,727
Apparel and services $1,846 1.5 points/$ 2,769
Transportation (gasoline) $2,090 1.5 points/$ 3,135
Other vehicle expenses $2,756 1.5 points/$ 4,134
Public and other transportation $661 2 points/$ 1,322
Healthcare $2,171 1.5 points/$ 3,256.5
All other expenses $6,174 1.5 points/$ 9,261
TOTALS $31,633 N/A 99,284

As you can see, the “average” American consumer would earn almost 100,000 points in the first year of using the Bank of America Premium Rewards credit card. Not too shabby!

Of course, these amounts are for regular cardholders that aren’t a part of Bank of America’s Preferred Rewards program. If your balance is $20,000 or higher, you’ll earn 25% – 75% additional points (excluding the sign-up bonus, which is the same for all). Here’s the total you’d earn across the three tiers of Preferred Rewards:

  • Tier 1 – Gold ($20,000 – $50,000): 111,605
  • Tier 2 – Platinum ($50,000 – $100,000): 123,926
  • Tier 3 – Platinum Honors ($100,000+): 136,247

These are all solid boosts to the standard earning rates, making this card even more attractive to loyal Bank of America customers.

Redeeming Points

One of the best things about the Premium Rewards Card is how simple it is to redeem points. Regardless of the award you want, you’ll receive a flat value of 1 cent per point. This means no stress over squeezing every bit of value out of your redemptions and no need to worry about accidentally choosing one that gives you poor value. Whether you’re selecting cash back (as a statement credit or deposited directly into an eligible account), redeeming for travel purchases or opting for gift cards, you can rest easy knowing that you’re getting a solid return on your spending.

Here’s how the points above translate to redemption value:

  • Regular: $992.84
  • Tier 1: $1,116.05
  • Tier 2: $1,239.26
  • Tier 3: $1,326.47

Keep in mind too that this doesn’t include the perks mentioned above, so if you maximize the $100 airline incidental credit and the Global Entry credit, you’re actually getting an additional $105 worth of value (after factoring in the $95 annual fee).

Bottom Line

New credit cards create a great deal of excitement, and the Bank of America Premium Rewards credit card is a great addition to the fixed-value category of travel rewards cards. Even though the card carries an annual fee, the earning rates and added perks make this a solid option for those who want simplicity in a hobby that is often complex. This value is further enhanced for current Bank of America customers with at least $20,000 in their accounts, and hopefully this analysis has shown just how rewarding the card can be in the first year of cardmembership.

For more details, be sure to check out the following posts:

Are you impressed by the year’s worth of earnings on the Premium Rewards Card?

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.