--- title: Bank of America Preferred Rewards Probably Suck --- # Bank of America Preferred Rewards Probably Suck ### 2023-04-03 Bank of America (BofA) has a rewards program that is tiered based on how much of money you have with BofA or an associated Merrill account. There are five tiers that they offer, with (among other things) a credit card percent bonus: | Tier Name | Minimum Balance Required (USD) | Credit Card Bonus | | --------------- | -----------------------------: | ----------------: | | Gold | 20,000 | 25% | | Platinum | 50,000 | 50% | | Platinum Honors | 100,000 | 75% | | Diamond | 1,000,000 | 75% | | Diamond Honors | 10,000,000 | 75% | The credit card percent bonus is an additional amount of points or cash back based on how much you original were going to get. For example, a 75% percent bonus on a 1.5 points per dollar purchase gives you an additional 1.125 points, or an effective rate of 2.625 points back. Preferred Rewards also comes with a interest rate booster on a savings account, from 5% on the Gold tier to a maximum of 20% at the Platinum Honors and above. That sounds nice, except that the base Annual Percent Yield (APY) on these savings account as of writing this, is a whopping 0.01% APY. Not 1%. 0.01%. They're generous enough to round up, though, so Gold gets an rate of 0.02%, Platinum Honors and higher gets an astounding 0.04%. What a steal! High Yield Savings Accounts (HYSA) are FDIC-insured accounts that offer a high interest rate for money in your account. Because they are a savings account, you cannot ever lose numerical value in this account. They have a variable APY though, so while it may have a high APY now, it might not in the future. As of March 2023, they have an APY from anywhere of 2% to 5%. If you look at just APY alone, it's clear that if you're looking to park an emergency fund or have short-term plans in mind, it makes absolutely no sense to keep your money at BofA. But if you attempt to consider the credit card bonus, it might not be as clear. After all, earning an extra percent or two on your credit card purchasing is incredibly enticing. In reality, it only makes sense if you have an brokerage account with Merrill and you're happy with what Merrill offers. Lets consider the total value that a person gets from keeping money in a BofA savings account and getting the credit card bonus over moving to a HYSA. We'll say that the person wants to keep it in a savings account as they want to save this money as an emergency fund. We'll also assume that additional points have a 100 to 1.00 USD exchange rate.
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