If you’re carrying a Bank of America card and you aren't paying attention to the Preferred Rewards program, you’re basically leaving free money on the table. Honestly, most people just sign up for a card because of the sign-up bonus and then forget about it. That’s a mistake. The real magic happens when you link your banking and your credit cards together. It turns a "meh" credit card into a powerhouse that can actually beat out those fancy premium cards with $550 annual fees.
What is Bank of America credit card preferred rewards anyway?
It’s not just a points program. It’s an ecosystem. Think of it as a loyalty tier system for your entire financial life. If you keep enough money with Bank of America or Merrill (their investment arm), they give you a "boost" on your credit card rewards. This isn't a tiny 5% bump. We're talking about a massive 25% to 75% increase in what you earn on every single purchase.
Let's say you have the Customized Cash Rewards card. Normally, you get 3% back in a category of your choice. With the top tier of Preferred Rewards, that 3% jumps to 5.25%. That is huge. There are very few cards on the market that can touch a consistent 5.25% return without making you jump through a million hoops.
The program is split into four main tiers: Gold, Platinum, Platinum Honors, and Diamond. To get in, you need a three-month average combined balance in your Bank of America deposits and/or Merrill investment accounts.
- Gold Tier ($20k+): You get a 25% rewards bonus.
- Platinum Tier ($50k+): You get a 50% rewards bonus.
- Platinum Honors ($100k+): You get a 75% rewards bonus.
- Diamond Tier ($1M+): You still get the 75% bonus but with extra "lifestyle" perks like specialized events.
The Merrill "Cheat Code"
Most people see that $100,000 requirement for Platinum Honors and immediately check out. "I don't keep $100k in a checking account," they say. And they're right! Keeping that much cash in a standard savings account earning 0.01% is a terrible financial move. It's basically burning money through inflation.
But here is the trick: Merrill Edge accounts count toward the total.
If you move your IRA, your 401(k) rollover, or just your regular brokerage account where you hold index funds like VOO or VTI over to Merrill, you hit those tiers without keeping a dime in a low-interest savings account. You’re investing for your future anyway; you might as well get paid extra on your grocery and gas spending while you do it.
Why the Unlimited Cash Rewards Card Becomes Unstoppable
Standard "catch-all" cards usually give you 1.5% or maybe 2% back if you're lucky. The Bank of America Unlimited Cash Rewards card starts at 1.5%. Simple.
But watch what happens with the boost.
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If you’re at the Platinum Honors level, that 1.5% gets a 75% increase. Suddenly, you are earning 2.625% cashback on every single thing you buy. No categories. No limits. No thinking. For people who hate "couponing" with their credit cards and just want one card to rule them all, this is the gold standard. It beats the famous 2% cards by a wide margin.
It’s the difference between getting $300 back a year and getting $525 back. Over a decade, that's thousands of dollars just for having your investments in one specific place.
The Reality of the Customized Cash Rewards Strategy
The Customized Cash Rewards card is the other pillar of this strategy. It lets you pick a category—like online shopping, dining, or travel—to earn 3% back on.
The Online Shopping Loophole
The "Online Shopping" category is notoriously broad. Bank of America is surprisingly generous here. It often covers things you wouldn't expect: streaming services, internet bills, and even some insurance premiums paid online.
At the Platinum Honors level, that 3% becomes 5.25%.
Think about that. 5.25% off almost everything you buy on the internet. Amazon? 5.25%. Wayfair? 5.25%. Even your random niche hobby sites. The only catch is there's a $2,500 quarterly limit on combined choice category/grocery/wholesale club spend. Once you hit that, it drops to 1%.
Pro tip: Some "power users" actually open multiple versions of this card. They might have one for online shopping and another (like the Susan G. Komen version or the MLB versions) set to dining. If you have the assets to back it up, you can effectively map out your entire budget to earn 5.25% back.
Is it Worth Moving Your Assets?
This is where the nuance comes in. You shouldn't move your money just for a credit card perk if the investment platform sucks.
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Thankfully, Merrill Edge is actually a solid, low-cost brokerage. They have $0 trades on stocks and ETFs. Their interface isn't as "slick" or "gamified" as Robinhood, but it's functional and professional.
However, there are downsides.
- The 3-Month Average: You can’t just dump $100k in and get the bonus tomorrow. Bank of America looks at your average daily balance over the last three months. It takes time to "warm up" the account.
- No High-Yield Savings: Bank of America’s internal savings rates are generally pathetic. If you need to keep $50k in cash for a house down payment, you are better off in a high-yield savings account (HYSA) at an online bank, even if it means missing out on the credit card boost. The interest you lose at BofA would likely be more than the extra cashback you gain.
- The Complexity: Managing multiple cards to stay under the $2,500 quarterly caps is a bit of a chore.
Real World Example: The "Normal" Spender
Let’s look at a real-life scenario. Sarah has $105,000 in an IRA. She moves it to Merrill Edge. She is now Platinum Honors.
She spends $1,000 a month on "Online Shopping" (which includes her utilities paid online) using her Customized Cash card.
She spends $2,000 a month on everything else using her Unlimited Cash card.
- Customized Cash: $12,000/year at 5.25% = **$630**
- Unlimited Cash: $24,000/year at 2.625% = **$630**
- Total Annual Cashback: $1,260
Without the Preferred Rewards program, she would have earned about $720. The program literally handed her an extra $540 for doing nothing but changing where her stocks are held.
Common Misconceptions and Pitfalls
People often think you need to pay a fee to be in Preferred Rewards. You don't. It's free.
Another big one: "I need to have a Bank of America mortgage." No, you don't. While being in the program does give you a small discount on mortgage origination fees ($200 to $600 off), it's not a requirement for the credit card perks.
Wait, what about the Premium Rewards® card?
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That’s the one with the $95 annual fee. It’s a great card, but it’s essentially the "travel" version of the Unlimited Cash card. It earns 2 points for travel and dining and 1.5 points for everything else. With the 75% boost, that’s 3.5% on travel/dining and 2.625% on everything else. If you travel a lot, the $100 annual airline incidental credit actually makes the card "pay you" $5 to hold it. But for most, the no-fee cards are the way to start.
Actionable Steps to Get Started
If you want to stop settling for mediocre rewards, here is how you actually execute this:
1. Audit your balances.
Look at your current brokerage accounts and IRAs. Do you have at least $20,000 you can move? If the answer is no, this program probably isn't worth the effort yet. Focus on building your net worth first.
2. Open a Merrill Edge account.
If you have the funds, start the transfer process (ACATS). This usually takes 5-7 business days. Remember, the 3-month "clock" starts once the money lands.
3. Open the right card for your spending.
If you spend a lot in specific categories, get the Customized Cash Rewards. If you want a simple life, get the Unlimited Cash Rewards.
4. Link your accounts.
Once your balance hits the threshold, you usually have to "enroll" in the Preferred Rewards program through the Bank of America app or website. It’s not always automatic.
5. Wait for the "Boost."
Monitor your credit card statements. You’ll see the base rewards first, and then a second line item for the "Preferred Rewards Bonus."
Moving $100,000 is a big deal. Don't do it blindly. Check your current brokerage for any exit fees (though Merrill often offers "transfer bonuses" that can cover these). But if you’re already an index fund investor, there is almost no reason not to take advantage of the best-kept secret in the credit card world. It’s the closest thing to "free money" the banking industry offers.