Bank of America® Cash Rewards Review: One of the Best Cash Bonuses On the Market

Bonuses have become an increasingly important feature on cash-back cards as the competition between card issuers has grown. The Bank of America® Cash Rewards credit card is no slouch in that department, featuring high cash-back rates in several spending categories and a great sign-up bonus. If you have any banking or investment accounts with Bank of America, you can raise those cash-back rates even higher.

The big question is whether the bonuses and other benefits make the Bank of America® Cash Rewards credit card the best choice in a crowded marketplace. To help you make the call, I’ve put together an in-depth look at all the card details.

Up to 3% cash back -- You’ll earn the following cash-back rates with the card:

• 3% in your choice category
  
• 2% at grocery stores and wholesale clubs
  
• 1% on all other spending

The 2% and 3% cash-back rates are for your first $2,500 in spending combined at grocery stores, wholesale clubs, and your choice category each quarter

$200 intro bonus -- To get this bonus, you must spend $1,000 within the first 90 days. Considering how much you’ll make for a very small minimum spending requirement, this card has one of the best sign-up bonuses among best-in-class cash-back cards.

No annual fee -- Like quite a few other cash-back cards, this card doesn’t charge an annual fee.

0% intro APR -- The 0% intro APR lasts for 12 billing cycles and applies to purchases and balance transfers, although balance transfers must be made within 60 days of your account opening to qualify. That’s not a big deal, because if you’re planning to transfer credit card debt, you’d want to do that as soon as possible, anyway.

Bonus cash back for Bank of America customers -- What makes Bank of America different from other card issuers is the special bonuses it offers for clients who also have banking or investment accounts.

Here’s how it works: If you meet combined balance minimums in any bank accounts with Bank of America and investment accounts with either Merrill Lynch or Merrill Edge, you’ll qualify for even larger bonuses through the Preferred Rewards program. The tiers to that program are:

• Gold -- $20,000 combined balance minimum, 25% bonus
  
• Platinum -- $50,000 combined balance minimum, 50% bonus
  
• Platinum honors -- $100,000 combined balance minimum, 75% bonus

You can see how each bonus would affect your cash-back rates in the table below.

Caps on bonus categories -- If you spend a lot at gas stations, grocery stores, and wholesale clubs, you could hit the $2,500 quarterly spending cap. At that point, you’ll only earn an unspectacular 1% back.

3% foreign transaction fee -- While foreign transaction fees are commonplace among cash-back cards, that doesn’t mean we have to like them.

The most important numbers to look at with a cash-back card are the cash-back rates and the annual fee. By comparing the cash-back rates to your typical spending and subtracting the annual fee, you can estimate how much the card will earn you per year.

There are two types of cash-back cards -- cards with bonus categories and cards that earn a flat rate on all spending.

Since you can choose gas, online shopping, dining, travel, drug stores, or home improvement/furnishings as your 3% cash back category with the Bank of America® Cash Rewards credit card, you can get a lot of value from this card if you are a big spender in one of those categories. If you aren't a big spender in one of those categories, you may be better off with a flat-rate bonus card.

In my comparison of the Bank of America® Cash Rewards credit card and the Bank of America® Travel Rewards credit card, I found that the average consumer would earn more with the latter card. If you prefer travel rewards over cash back, it may be the better choice for you. That card earns 1.5 points per $1, but among the leading cash-back cards, there are multiple options that earn 1.5% back.

Good to excellent credit (generally 670-plus FICO® Score) is suggested for the Bank of America® Cash Rewards credit card. Note, people with higher scores can be declined and people with lower score may be approved. Credit scores are just one factor used to make a credit decision.

Case in point, Bank of America credit cards are unique in that on some denied applications, it has given “lack of deposits or investments” as a denial reason, and applicants have reported being offered the opportunity to get a credit card if they open a certificate of deposit with the bank first. Based on that evidence, it appears having a banking or investment account with Bank of America could help you get a card with them.

If either of the following are true, then applying for the Bank of America® Cash Rewards credit card is a no-brainer:

• You have banking or investment accounts with Bank of America, Merrill Lynch, or Merrill Edge.
  
• You spend a lot of money on gas.
  
• You’re looking for a lucrative sign-up bonus without having to spend a bunch to qualify.

The sign-up bonus is both easy to qualify for and best-in-class, 3% back on gas is an excellent rate, and Bank of America’s customer bonuses can boost your cash back quite a bit.

Since the Bank of America® Cash Rewards credit card has no annual fee, it may be worth getting regardless as a card you use at the pump. But if you’re not a Bank of America customer (or aren’t planning to become one), don’t spend heavily on gas or groceries, or are looking for more than just a sign-up bonus, I’d advise looking at the other top cash-back cards for your primary cash-back card.