Bank of America Customized Cash Rewards Credit Card Review

Full Review of Bank of America Customized Cash Rewards Credit Card

Pros Explained

• Generous cash back rewards: This card offers 3% cash-back on a bonus category of your choice; the options are gas (a category that includes heating oil and marine fuel), online shopping, dining, travel, drug stores, or home improvement/furnishings. The category can be changed if you wish, although you must stay with each one for at least a month. The card pays 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases.
• Easily earned bonus offer for new cardholders: The bonus is among the easiest introductory cash offers to earn. Charging just $1,000 in your first 90 days with the card brings a $200 reward. And that’s in addition to what you’d earn in cash back on those purchases.
• No annual fee: The Bank of America Rewards offers above-average rewards for a card that has no annual fee. Unlike cards that merely waive the fee for the first year, then, you won’t face a decision on whether to pay a fee to renew the card in subsequent years.
• Fairly generous introductory 0% APR offer: This card has attractive terms if you’re seeking to carry debt transferred from another card interest-free or to make major purchases without incurring interest charges. There’s a 0% introductory period for the first 15 billing cycles on new purchases and balances transferred within the first 60 days of account opening. There is, however, a balance transfer fee of 3% of the sum transferred or $10, whichever is greater. After the introductory period, the APR varies within 16.24% to 26.24% variable.
• Substantial bank- or investment-account balances allow for extra cash back bonuses: The card’s cash-back bonuses become more generous still if you have at least $20,000 in a Bank of America bank account or Merrill investment account. Under the bank’s Preferred Rewards program, a three-month average balance of $20,000 will earn you an additional 25% in cash back. The bonus rises to 50% if you maintain a $50,000 balance and 75% if you have $100,000-plus in an account. B of A customers with substantial holdings will be hard-pressed to earn better rewards with any other card.

Cons Explained

• Spending caps on premium rewards: Cardholders earn 3% on categories and 2% on grocery stores and wholesale clubs on the first $2,500 in combined purchases per quarter. That’s a higher figure than most cards with caps and should suffice for a typical household. However, if you’re an especially big spender in categories featured by the card, you may want to consider a card that has both high rewards and no caps. There’s no cap on the rewards you can earn at the standard 1% cash back rate.
• Limited redemption options: As with almost all cards, rewards can simply be redeemed for a statement credit at any time for any amount. But where most cards allow a range of other ways for any customer to redeem cash back, including as gift cards that sometimes come with bonuses, this card’s other options cater exclusively to Bank of America and Merrill customers. Rewards can be deposited directly into a Bank of America checking or savings account or be credited to a Merrill Lynch or Merrill Edge account, including being automatically invested in a 529 educational plan.
• Purchases at multiple-category stores do not qualify for grocery rewards: As with many cards, the definition of grocery stores used by Bank of America exempts superstores that sell groceries, such as Walmart and Target, as well as convenience stores. That means you’lll earn only the regular 1% cash back rate on groceries bought at those stores, not the 2% one. However, you can earn the 2% rate on purchases from wholesale clubs, a retail type that many cards exempt from premium rewards.

The Bank of America Customized Cash Rewards card is most rewarding to those with a sizable balance in a Bank of America or Merrill account. If you hold between $20,000 and $100,000 in such an account, you’ll supercharge your cash back rates by 25% to 75%. With the bonuses, you’ll earn between 3.75% and 5.25% on your selected category, 2.5% to 3.5% on grocery stores and wholesale clubs, and 1.25% to 1.75% on all other purchases.

The card has appeal, however, even to those who lack an account with a hefty balance. Its generous 3% cash back on a select category of your choice makes the Bank of America Customized Cash Rewards card ideal for shoppers who are well-organized and willing to plan their purchases around that top rate, including changing the bonus category when necessary.

It’s also well-suited to those who shop a lot at regular supermarkets or at warehouse clubs such as Sam’s Club and Costco—where many cards (except the clubs’ own branded cards) exempt these retailers from premium rewards rates, the Bank of America Customized Cash Rewards pays 2% cash back on purchases there.

Bank of America Customized Cash Rewards Credit Card Bonus

New cardholders can earn $200 cash back after making $1,000 or more in purchases on their card within the first 90 days of opening an account. The bonus posts to the rewards balance in your account eight to 12 weeks after you qualify to receive it.

That’s one of the higher bonus offers among cash-back rewards cards with no annual fee. Although, the Capital One Quicksilver card offers a bonus of $200 with a lower spending requirement of just $500 during the first three months.

Rewards Earning Details

Cardholders can earn 3% cash back on a category of their choice: gas (a category that also includes heating oil and marine fuel), online shopping, dining, travel, drug stores, or home improvement/furnishings. You can change up categories to once per month.

Bank of America is fairly liberal when it comes to how it defines its retail categories. For instance, you’ll earn premium rewards for dining not only at restaurants and fast food vendors but potentially at establishments that primarily sell drinks, including bars, cocktail lounges, discotheques, nightclubs, and taverns.

As with many cards, though, superstores that sell groceries, such as Walmart and Target and convenience stores, aren’t eligible for the 2% cash back at grocery stores. You can, however, earn the higher rate on purchases from wholesale clubs, which many cards exempt from their premium rewards category.

There’s a combined cap of $2,500 per quarter at the 3% and 2% earning tiers. You earn 1% cash back on all other purchases.

Those who qualify and sign up for Bank of America’s Preferred Rewards program have the opportunity to increase their rate. Customers in the Gold tier, which requires a Bank of America personal checking account or Merrill account with a three-month average balance of $20,000 to $49,999, get a 25% rewards bonus. Those in the Platinum tier, with an average balance of $50,000 to $99,999, get a 50% rewards bonus. And those in the Platinum Honors tier, with an average balance of $100,000 or more, get a 75% rewards bonus.

Rewards Redemption Details

Cardholders have fewer redemption options than with most other cards, especially if they aren’t a Bank of America banking or investment customer. Cash back rewards can be redeemed for a statement credit at any time for any amount. Rewards can also be deposited into a Bank of America checking or savings account or redeemed for a credit to an eligible Merrill Lynch or Merrill Edge account.

Cardholders can also opt to redeem cash back in the form of contributions to a 529 account with Merrill Lynch or Merrill Edge. It’s even possible to set up automatic redemptions starting at $25 to an eligible Bank of America, Merrill Lynch, or Merrill Edge account.

How to Maximize Your Rewards

To make the most of this card, try to get as close as possible to the $2,500 spending cap in every quarter. Since that figure represents a relatively high amount for most households, you may want to shop strategically to maximize your cash back. For example, if you’re patient and organized, you might frequently change the premium rewards category to suit seasonal spending.

For example, you might switch to making the richest rewards on apparel during the holiday season, to buy clothing gifts, and take advantage of sales. You might then switch the category to furnishings when you plan major purchases of furniture and home goods, and to gasoline when you’re embarking on an extended summer road trip.

With those highest rewards optimized, you should then focus as much of your remaining spending as possible in grocery stores and warehouse clubs, where you’ll earn a still-respectable 2% cash back. True, warehouse clubs such as Costco and Sam’s Club impose fees of between $45 and $60 a year for a standard annual membership. You should, however, readily justify that expense through higher cash back earnings and the club’s customary low prices.

If you’re prepared to take ultimate measures to maximize this card’s benefits, you might consider shifting some assets to Bank of America or Merrill, in order to earn the higher Preferred Rewards bonuses of 25% to 75% on cash back earnings. However, given the sums you’d need to transfer ($20,000 to $100,000), be cautious about making a change with so many implications simply to earn additional rewards.

Average Case

It would be easy, we calculate, for an average household to net at least $300 or so in rewards with this card. Here’s how our math breaks down.

Let’s assume a (simple, and thus likely) scenario of selecting the category eligible for the 3% cash back rewards in which the typical U.S. household spends the most, that of dining out. The average household spends $197.92 per month on food outside the home, according to the Bureau of Labor Statistics.

Charged to the card at a 3% cash back rate, the average quarterly spending on eating out of $593.76 would yield about $17.81 a quarter, or $71.25 a year, in rewards. Typical household spending on groceries would add another $1,235.50 per quarter. At the 2% cash back rate for such purchases, that spending would yield rewards of another $24.71 or so a quarter, or $98.84 a year.

That combined spending, of $1,829.25, is still about $670 short of the combined quarterly cap for 3% and 2% categories. So let’s assume our household spends the remainder of each quarter’s limit on common buying categories at a warehouse club, where purchases earn a 2% rate. For example, they might buy a combination of gas, which some clubs offer (average household spending per quarter: $392), apparel ($358.50), and personal-care products ($161.50).

Spending the remaining $670.75 a quarter, to get up to the $2,500 quarterly limit, at a warehouse club would yield about $13.42 a quarter or $53.68 a year in 2% cash back rewards. That’s more than half of the club’s $60 annual fee.

You’d then be free to continue enjoying the club’s low prices for further purchases and to earn 1% cash back on them. Let’s say you charge an additional $9,000 in assorted purchases each year. Those charges, wherever they’re made, would yield a further $90 a year at a 1% cash back rate.

This spending scenario would yield $313.71 a year in total cash back rewards.

Aspirational Case

You’ll get the most cash back out of this card if you can hit the $2,500 spending cap each quarter with spending at the 3% rate alone.

To do that, you’d have to be a big, diverse spender who tactically switches categories to make the most of where you’re spending.

For example, let’s say you spend $1,500 on travel one month out of the quarter, then switch to home improvement for the next month, spend $500, and spend a further $500 on online shopping the final month of the quarter. Your basic cash back for the quarter from purchases at the 3% cash back rate would be the maximum allowed, $75.

Then, as with the typical case above, you’d add to the total by charging to the card the national average of $1,235 a quarter on groceries, which would yield rewards at the 1% rate of another $12.36. Plus, further rewards of $5.94 a quarter for 1% cash back on a typical spend of $593.75 a quarter on dining out.

That would yield $93.30 in rewards for the quarter. But let’s further assume the cardholder qualifies for the highest tier of Bank of America’s Preferred Rewards program by holding a combined account balance of $100,000 or more in B of A and Merrill accounts. That would earn a 75% boost on the rewards earnings, to yield an additional $69.96 in cash back for the quarter. The grand total for the quarter would be an impressive $144.96.

Those earnings probably aren’t sustainable. Given the restrictions of the 3% cash back categories, even a wealthy spender probably couldn’t easily hit the limit on spending within them for four quarters in a row. But let’s assume they did so for two quarters, which would earn $289.92 in rewards, including the Preferred Rewards boost.

For the other half of the year, they might pursue the same $2,000/$500 split between 3% and 2% rewards spending we set out for the average case above. This spending gives $140 in total for the two quarters. Let’s say they would charge to the card a further $9,000 in assorted spending throughout the whole year, which would earn 1% cash back. That would add $90 of cash back. With that $90 and $140 from the bonus categories of two quarters, we have $230. With the highest preferred bonus of 75%, that $230 would gain $172.50 more for a total of $402.50

Putting together the year, we would have a total of $692.42 in cash rewards.

Standard Benefits

• $0 Fraud Liability Guarantee
• Overdraft protection
• Online and mobile banking
• Paperless statements
• Chip-enabled card
• Free monthly FICO score free

Cardholder Experience

Bank of America ranked 5th and scored below average in the J.D. Power 2021 U.S. Credit Card Satisfaction Study.

Credit card customer service is available 24/7 at 800-732-9194.

Security Features

Bank of America provides standard security features, including automatically receipt of fraud monitoring and freedom from liability for fraudulent purchases.

This card also comes with chip technology, overdraft protection, online and mobile banking and account alerts. You can add this card to your digital wallet, sign up for account alerts to get reminders about balances and due dates, and get a free FICO score update each month.

Our Verdict

This no-annual-fee card is a strong option for households whose spending varies a lot by category throughout the year because of the flexibility to choose (every month if they wish) the purchase category on which they earn the highest cash back rate of 3%. That’s a unique feature. And even if you leave the card at the default gasoline category, that 3% rate competes well with the best rates for gas purchases on other cash back cards.

In addition, the card offers a healthy 2% rate on purchases at supermarkets and warehouse clubs. The ability to charge food, and anything else, to purchases at the clubs—including Costco, BJ’s, and Sam’s Club—is unusual in a no-fee card and could allow you to receive a comparable 2% cash back those clubs offer on their own premium memberships without paying the extra membership fee of between $40 and $120 a year to do so. However, remember that you would be missing out on the additional 2% that a premium warehouse membership would provide, along with any perks tied to the membership.

The Preferred Rewards bonuses this card awards to those with large ($20,000 and up) account balances at Bank of America or Merrill is a unique feature that makes the Bank of America Customized Cash Rewards an unbeatable cash back options for such customers, who can add 25% to 75% to their total rewards.

Such account holders aside, this card isn’t necessarily an optimal choice for everyone. Very big spenders who may charge more than the hefty $2,500 spending cap to their preferred category within a quarter might be better off with a card that pays a lower rate, but on unlimited spending and in all categories, such as the Citi Double cash card and Capital One Quicksilver Cash Rewards.

The Citi Double cash card, for example, offers 1% cash back when you purchase and an additional 1% cash back when you pay off your balance—essentially 2% cash back. If you spend $4,000 per month, the most you could earn with the Bank of America Customized Cash Rewards card is $170 per quarter. The Citi Double cash card would earn you $240 in cash back.

Since some cards offer better introductory 0% APR offers on balance transfers and new purchases, the Bank of America Customized Cash Rewards isn’t ideal if these perks are your top priority in a card. That said, this card’s offer is generous enough, although there’s a fee for balance transfers, which some cards do not impose.