An Audit of BoA Credit Card Reward Efficiency (2019 Q3)

Purpose of this Post

The third quarter of 2019 is days away from ending, thus resetting the $2.5k/quarter BoA Cash Rewards limits.

As a reminder, if the $2.5k/quarter spending limit is exceeded, the normal rewards of 3% (category of your choice) or 2% groceries/wholesale are degraded to 1% for all subsequent spending. If you have Platinum Honors status, like me, then the 5.25% rewards (category of your choice) or 3.5% groceries/wholesale are degraded to 1.75% for all subsequent spending

2019 Q3 is the first quarter in which we’ve owned four BoA Cash Rewards Cards. The purpose of this post is to audit how efficiently we used them and whether there is anything to be learned/improved upon. Since I did it for my own curiosity, I thought I may as well pass it on.


Background Info for Context

I’ve blogged a few times about what I think is the CC rewards best strategy on the planet:


BoA Cash Rewards Utilization

We have four BoA Cash Rewards Card across my wife and me. Here’s how we utilized them this quarter. The last quarter calculates how close to the $2.5k/quarter cap we were on each card.

As shown, we were able to funnel $9k of spend across the 4 cards this quarter, leaving a relatively thin margin of excess capacity.


Summary of Rewards Earned Across All Credit Cards (4*BoA Cash Rewards + 1*BoA Premium Rewards)

I was curious to see how we did. I calculated a weighted-average of 4.52% cash back across all of our 2019 Q3 spend. If I recompute with our $4k property tax payment, this drags down the average to 4.18%. I believe this to be misleading because I’m basically breaking even on the transaction (2.625% cash rewards roughly equals the property tax credit card swipe fee), so I mainly used it as a credit card float play (a 60 day delay in payment of the property tax).

There were a few blunders this quarter in which I didn’t use the right card at the right time. These blunders cost me $31.51 this quarter. The most common blunder was blowing through the $1k/month 5.25% Costco Cash card and having to swipe any remaining Costco transaction with the 3.5% BoA Cash Rewards Card. I’m rectifying this mistake by committing to have around $500 of extra Costco Cash laying around so I don’t ever make that mistake again.

I recalculated the cash back if I’d optimized correctly, and it increases my rewards by $31.51 to an average cash back of 4.71%.


The astute reader of the blog will recognize that a quarterly cash rewards bonus of $773.79 isn’t the greatest thing in the world. After all, the sign-up bonuses on many credit cards are similar. I’d respond by saying that the two strategies (bonus chasing vs using best cards) aren’t mutually exclusive. You can achieve high cash back in conjunction with new account bonuses on other cards. To do this optimally, all of my 2.625% category spend would be redirected towards the minimum spend on the new cards. But I’m pretty happy with the setup so the allure of bonus chasing isn’t terribly enticing at the moment, especially when considering the extra mental bandwidth to keep track of another log-in, payment method, etc.

The astute reader of the blog will also recognize that the spending is a bit elevated relative to what I report on the blog. This is reconciled by the fact that some of the spending captured in this audit was reimbursable (such as the $920 boy scout troop registration fee “BSA Council” that was paid back to us by our church). The same is true for work travel/meals, which flows through my personal card. I harvest the 5.25% bonus, then get reimbursed the full amount. Suffice it to say that I love when reimbursable expenses flow through my personal cards, particularly at the 5.25% cash back level.


The Nitty Gritty Lessons Learned

What constitutes “travel” still continues to elude me:

  • What counts as “travel”, and thus eligible for the 5.25% rewards:
    • One of our campsites at Grand Teton ($40.50; FLAGG RANCH FRONT DESK).
    • A rec center fee in Aurora, CO ($110; PROS RECREATION – AURORA, CO).
      • My rec center fee on campus does not count as “travel”
        • I think zoo/museum memberships generally count as travel; I’ll experiment with this going forward
    • Toll roads
      • E470 in Denver
      • Golden Gate Bridge
    • Airport Parking (a couple different locations)
    • Train (Frontrunner in SLC)
  • What did not count as “travel”, and thus ineligible for the 5.25% rewards:
    • Campground fee at Glacier ($40 GLACIER NP-ST MARY)
    • Online campground fee at Glacier through ($23 RECREATION.GOV)
    • Glacier gift shop ($5.50 GNP CONSERVANCY – ST. MAR – WEST GLACIER, MT)

Other lessons learned:

  • Convenience stores count as gas.
  • A direct online reservation of a hotel (not via did NOT count as an “online” transaction.
  • The “online” category appears to be incredibly robust.
    • All of the following counted as “online” transactions:
      • Random merchants (overseas bike company, internet musical instrument retailer, online (tree) nursery)
        • The overseas bike company turned out to be a bad idea because I incurred an unexpected 3% foreign transaction fee (for some reason I thought I’d avoid the fee because the item was denominated in dollars); luckily BoA forgave reimbursed the fee as a courtesy.
      • Dropbox subscription
      • Major retailers (Amazon, eBay, Walmart, Lowes, Costco, BestBuy, etc).
        • order with local pickup went flawlessly.
    • With the exception of the direct hotel reservation, I don’t think I’ve had a single transaction go through that I was hoping to count as “online” that didn’t.
  • Not a new lesson, but a reminder that Target does not code as “grocery” for us, so the 2.625% BoA Premium Rewards remains optimal there.


Transaction Audit

When computing the 5.25% cash back for small value transactions, BoA generally rounds up. For example, the $0.80 eBay transaction produced $0.05 of cash back, which equals to 6.25% cash back on the transaction due to rounding errors. I put a ceiling of 5.25% in the % cash back column primarily so that these outliers didn’t mess up the conditional formatting.


Obvious Disclaimer(s)

Spending an unnecessary $100 solely to get $5.25 back is a fool’s errand. But earning $5.25 back for $100 of expenditures that you were going to make anyway strikes me as an intelligent thing to do.

Paying more than a penny of credit card interest over one’s lifetime strikes me as sub-optimal. If you are carrying a balance on a credit card, then go read Dave Ramsey’s rants about getting out of debt.


$100k Disclaimer

As discussed in my previous posts, you need $100k at Merrill Edge to pull this off (which can be invested, so there is zero opportunity cost to account for). I realize that this is out of reach for many people (especially because 401k assets can’t count towards this), but those on the FI path will get there sooner than later.



Using the BoA system, we’ve achieved:

  • 5.25% on Gas / Travel / Dining / Online / Costco (when using Costco Cash) / in-store Walmart when using the “Walmart Pay” app (according to Zack M, which I’ve personally confirmed) / in-store Target when pre-loading Target gift cards (according to Zack M) / Sam’s Club when paying via their app (I’ve personally confirmed).
  • 3.5% on Grocery / Costco (when not using Costco Cash)
  • 2.625% on all else (doctors, utilities, taxes)

And we’ve done so with no annual credit card fees (after jumping through the minor selling-the-$100-AA-gift-card hoop with the preferred rewards card).

Given how much of our spending is in the 5.25% categories (Costco, mainly), our weighted-average spending across all categories is unsurprisingly fairly close to 5.25%. This most recent quarter we achieved 4.52% cash back across all purchases.

As shown in the above transaction audit, the BoA Premium rewards card is relatively impotent, only being used to get 2.625% on tax payments, utility payments, and payments to doctors. That said, since my family’s favorite past time unfortunately continues to be the surgical removal of internal organs, these payments to doctors still constitute a large percentage of our household’s budget. Therefore, I’ll continue to keep the card around and harvest a modest 0.625% spread over a more basic 2% card like the Fidelity Visa currently sitting dormant in my “sock drawer.”

Given how close we came to hitting the $10k/quarter cap ($2.5k/quarter cap * 4 cards), I’m considering getting a 5th BoA Cash Rewards card. If we go down this path, we’ll get a second BoA Premium Rewards card then product convert it to the 5th BoA Cash Rewards card to exploit the differential sign-up bonuses across the two cards [($500 sign up bonus + $100 travel credit + $100 global entry/TSA precheck credit – $95 annual fee) vs ($200 sign up bonus)].

Given the wealth and ingenuity and preference to optimize of the FI crowd, I’m unsure why this strategy isn’t more widely talked about within FI circles, who instead seem to obsess instead about “travel reward hacking.” As far as I can tell, I’m the only schmuck advocating this relatively dirt-simple cash back approach (no blackout dates, no crazy redemption strategies, no “travel partners” to mess with). It strikes me as the most obviously dominant credit card strategy on the planet right now, yet nobody else is talking about it. Perhaps I’m the crazy one?

34 thoughts on “An Audit of BoA Credit Card Reward Efficiency (2019 Q3)”

  1. Professor,
    You state counts as both travel and online. Is that correct ? I plan to use and want to be sure I use the right card. Also, if you are the crazy one, I am right there with you. I tired of the credit card hacking game, and prefer this method. Thanks for the update.

    • It’s been my experience that Expedia counts as “online” and “travel.” Note that this is difficult to infer, and can only be inferred by looking at a detailed page within BoA’s website (it’s located under Rewards tab => Change 3% Category => View spending from ….). Then you’d have to carefully infer whether it’s double counting. But the reports that it generates are somewhat cryptic and never at the transaction level; instead you have to infer individual purchases from aggregate reports.

      As far as goes, I honestly don’t remember how this coded and it would require a Herculean effort on my end to back it out (since it’s so convoluted). My gut reaction is that it’d code as Travel with 98% certainty and as Online with 75% certainty. If you have the luxury of changing categories before your purchase, I’d go with the “Travel” category prior to the purchase.

      My default strategy across the four cards going forward is:
      * 2 x Dedicated Online Cards
      * 1 x Dedicated Travel Card
      * 1 x Dedicated Dining Card with the option of converting it to a higher spend category if we hit our cap on the other cards.

      The dining card is the only one that remains in our wallet (unless formally travelling) aside from the premium rewards card. We put walmart transactions & in-store Costco on this dining card, so it definitely has “dual use” functionality.

      I’ve reverted to putting our gas spending on the Costco Cash card to not have to waste another BoA Cash Rewards card on it. If we end up taking a road trip (which is fairly rare for us), we’ll either put non-Costco cash on our 4% Costco Citi Visa card or temporarily change one of our cards to gas. I doubt the difference in rewards of 1.25% is worth that hassle though.

  2. In regards to Target, I’ve been buying gift cards at to get the 5.25% online shopping cash back. I then add the gift card to my account, and then pay in store using the target app (scan bar code via the wallet feature in the target app). Very convenient way to get 5.25% cash back without carrying any additional cards.

    • Thanks for the suggestion Zack. If I spent more than $50/quarter at Target, I’d surely implement your suggestion. It sounds really slick. I wish Costco did the same. It’s a slight nuisance carrying around the $1k gift card but I think the benefits far outweigh the costs.

      Costco just unveiled their new app nationwide; I’ll have to investigate whether the costco cash can be preloaded on to the app. My intuition says that Costco isn’t that technologically sophisticated.

  3. You’re not crazy. This is a great strategy especially for people who don’t travel. I suspect the rewards strategies are discussed more because those cards provide much bigger referral payments to the bloggers.

  4. No problem! In regard to target, I usually keep about $100 in my gift card on the app for my occasional target purchase.

    I also wish Costco had a way to load the cash cards into the app, but I agree it’s the worth the trouble carrying around the cash cards to save 5.25% (+2% executive cash back).

    I forgot to mention my way to get 5.25% cash back at Walmart. The “Walmart pay” feature in the Walmart app also appears to code purchases made in store as online shopping. So set Walmart pay to use your online shopping cash rewards card as the payment method. Then when you pay with Walmart pay in store, the transaction will be categorized as “online shopping”, and you’ll get 5.25% cash back.

    • Zack,

      Thanks for the tip on the “Walmart pay” feature. We have a decent amount of spend at Walmart, so this is a great tip. Thanks for the heads up!!!!

      It’d be nice to aggregate these lessons learned / hacks in a systematic way. Something like a wiki article that can be edited seems best. What doctor of credit does for stuff like this is crowdsource the comments, then incorporate them to the parent article. What I’ve done to date on the blog is a poor substitute for a centralized repository.

      – FP

      • By the way, I used Walmart Pay a few days ago and the transaction coded perfectly as “online”, just as you suggested. Thanks for opening up yet another avenue for 5.25% rewards at a store where I spend non-trivial money.

  5. I recently learned that my landlord offers the option of paying your rent with a credit card, with an (otherwise extortionate) 3.25% fee for the convenience. Thankfully, the transactions code as both “travel” and “online” for Premium Rewards / Cash Rewards, however, which makes it a net 2% bonus against Cash Rewards, or a net 0.25% bonus against Premium Rewards.

    This has drastically simplified my cashback strategy: I am able to fully utilize my two Cash Rewards cards’ quarterly bonus space with rent alone; the rest (largely travel & dining @ 3.5%, and groceries) goes on the Premium Rewards, which is the only credit card I have in my wallet – luxurious simplicity for someone who tries to optimize everything.

    The “cost” of shifting spend from Cash Rewards to Premium Rewards is (5.25 – 3.5 = 1.75)%, which is less than the “benefit” of the 2% margin on rent. There’s a lot of space to work with in such a generous rewards program. You’re not crazy! 🙂

    • “Luxurious simplicity” indeed! I love your setup.

      Curious how your rent is coding as “online” and “travel”, but that’s great for you!!!

      • The Travel category explicitly includes “Real Estate Agents and Managers (Rentals)” (a.k.a. MCC 6531). BofA has long had the most generous definitions of travel among card issuers. With respect to “Online”, the payment is made over the Internet, and not subject to the category exclusions of the Online category – as you’ve observed, that category is even more liberal.

        I admit I had to run a couple of small pre-payment transactions to verify this, the first time.

  6. I was looking at the reward credit cards on Bank of America site. I see the Travel Rewards card also offer 1.5 or 2.625 with highest Preferred reward level, and without the $95 annual fee. With the 5.25% Cash Rewards card for Travel and Dinning,
    the 3.5% for travel & dinning doesn’t seem to make a difference. Why do you choose Premium Rewards over Travel Rewards? Or have you ever considered the Travel Rewards card?

    Thanks Professor, nice blog!

    • Your answer might be in this post:

      I own the premium rewards as well, which gets me 3.5% on restaurants, 3.5% on travel, and 2.625% on all else.

      Since the BoA cash rewards card gets me 5.25% on travel and 5.25% on restaurants, the only reason why I use the premium rewards card is for the 2.625% all else category.

      It’s been a while since I looked at the travel rewards card, but it’s my understanding that it’s far inferior to my approach. In the linked post, I describe how the premium rewards card can be owned at around $0 annual fee after netting out the $100 travel benefit (I buy and sell a $100 AA gift card annually).

    • If indeed you’re fully packing Travel & Dining transactions onto the Cash Rewards cards, and only use Premium Rewards for its 2.625% on “other”, then it’s true that you can be served just as well by Travel Rewards.

      With the small caveat that you can do redemptions straight to cash with Premium Rewards, but must redeem as statement credit against a “travel” purchase on Travel Rewards. By assumption, this requires allocating a nominal fraction of your travel spend to the Travel Rewards card, to have something to offset against.

      As the Professor points out, though, Premium Rewards is a net-no-fee card, with a more generous signup bonus to boot. So just go for it.

  7. Professor: would you please write in details on how you and Zack M get 5.25% via gift cards loading on store app to pay in store yet recognized as online pay? I only have concept but no clue over how to do it. Thanks

    • Step 1:
      If you have $100k at Merrill Edge, you qualify for their Platinum Honors status, which amplifies credit card rewards by 75%. Thus, the 3% cash back at “online” retailers translates to 5.25% (=3%*1.75).

      Step 2:
      Install Walmart / Sams app on your phone if you shop there. Store the BoA Cash Rewards card (with the “online” category as your 3% category of choice) there as your payment method.

      Step 3:
      Pay with Walmart / Sams app. Get 5.25% back.

      Since Costco doesn’t have a slick app like this, I simply buy $1k/month of Costco Cash (now renamed to something slightly different), through, earning me 5.25% on the transaction.

      What Zack recommended was doing something similar with Target. Buying the Target gift card online, then storing it on the Target app so you don’t have to lug around a gift card (as I do the Costco Cash card).

  8. Thanks professor. Other Q: I know I can get 5%off purchase if I use Target credit card. Now will one get 5% off if using Target App, as Well?

    • I don’t shop at Target, but I doubt that you’d be able to pull off 5% + 5.25% = 10.25% cash back at Target. Reader Zack M is the one who would be able to confirm this.

      • In regards to Target, you would only get 5.25% back (plus 1% for Target Circle). This is how it works:

        1) Shop at for a target gift card and purchase one for yourself using your BoA Cash Rewards card with the “online shopping” category activated.
        2) BoA categorizes the purchase as online shopping and gives you 5.25% cashback on this purchase.
        3) The target gift card will be emailed to you. Log into your target account and add this gift card to your account.
        4) In the Target app, when you checkout, go to the “Wallet” tab and select the gift card as payment. Have the cashier scan the barcode to pay with the card.

        If you sign up for the new Target circle, you also get an additional 1% cashback on purchases. This will be automatically applied when the cashier scans the barcode in the Wallet tab.

        So total cashpack would be 5.25% + 1% Target circle = 6.25%. Not bad for not having to carry around any extra cards!

  9. I have now adopted your strategy and I agree BoA is a pain but still worth it. You may have already thought of this but wanted to point it out just in case. If you download an app for gas and add your BoA of credit card when you pay through the app this then counts as online. I did this for BP which is where fuel up 9/10 times and it works like a charm. Also they usually offer you some sort of incentive.

    • Thanks for the heads up Joe. Your app strategy for gas is similar to what I do at Walmart & Sams. Thanks for the recommendation. With my level of gas spend (a couple bucks per month), it’s a waste to have one of my four cards allocated to that category. Online clearly dominates the other categories because of its versatility.

  10. I do travel (a modest amount) but I still think that your Bank of America Cash Rewards/Premium Rewards strategy is currently the best place for the lion´s share of my spending.

    That said, they are not the only cards I use.

    For most of the modest travel that I do, Amtrak works well and the BoA Amtrak cobranded card gives me points worth over 9% back towards future Amtrak trips. No annual fee for that card.

    For most of my hotel stays, I have found quite a bit of value in my IHG cards each of which gives me a free night for $49 or $89.

    I recently had a strong desire to travel to Colorado (wedding of dear friend´s daughter) so last summer I decided to get a United co-branded card for that. (Fee waived the first year, lots of amenities associated with the card, including two free United lounge passes, free checked bag and preferred boarding, and enough initial bonus signup points I can use for a free trip to Puerto Rico in April.) I will probably cancel the card before the one year anniversary because United is not really the most useful long term airline for me for most purposes.

    Older daughter just moved to a new job in a place where Delta provides the only nonstop service between here and there. (And Amtrak will not work.) So I will probably get a Delta co-branded card for their bonus at some point down the road.

    I also opportunistically use Discover cards for their 5% rotating categories. Why not? They are free. (I have two of them.)

  11. You should consider adding 5x/5% cards such as Discover, Chase Freedom, US Bank Cash+, and Citi Dividend. You can have multiples of these too. All have no annual fee.

    • Pretty much every expenditure I make is generating 5.25% cash back. I’m below my quarterly spending caps. And I get to deal with only one bank.

      Help me understand the benefit of adding that new complexity to my life with Discover. Are payments to doctors ever 5% back? Given our high deductible health plan, we often have sizable ($7k/year) expenditures.

      • If the health plan can be paid online and counts with BoA you are golden. Otherwise, I’d recommend my daily driver, the Premium Rewards card (2.625% everywhere, 3.5% dining/travel unlimited).

        • It’s a good daily driver. I have the card as well. But the vast majority of my spend (probably 90% of it) falls under BoA’s 5.25% categories so I seldom use the card (except for property taxes & doctors).

          In the couple of times I’ve experimented with using the BoA Cash Rewards card to make online payments to docs, it has yet to code as “online”.

  12. Professor – Sorry for the months late comment – I just found this blog about a month ago and I was already aboard the BOA Preferred Rewards gravy train, but I loved all the ideas on optimizing on this blog and the other couple of pages that you have linked! I never thought of getting multiple Cash Rewards cards, but due to this blog, we applied for and received a new baseball card a few weeks ago, and now we’re starting to clean up in the “online shopping” category.

    Zach M’s comments also inspired me to experiment with the Kroger Pay function on the Kroger app, since Kroger is where we do 90% of our grocery shopping. Just like the Walmart Pay app he describes, the Kroger Pay app codes as online shopping, so now we’re getting the 5.25% back on groceries as well as dining (first Cash Rewards card) and online shopping (2nd Cash Rewards card). The app is key because unfortunately (and somewhat oddly), doing an online Kroger order for pickup or delivery does NOT count as online, but rather counts as grocery. The only way to get 5.25% back at Kroger appears to be using the Kroger Pay function when you’re at the store. At least with everyone wearing masks now, we feel reasonably safe going to the store in these strange times.

    Thanks for all your posts I’m not sure I am smart enough to take advantage of most of your ideas, but the credit card rewards..that I can do! Best – Joel E


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