Best Credit Card Rewards Strategy – 2018 Edition

***** This post is now obsolete and has been replaced by this one: ****





**** Begin 2019 update ****

This post was written in late 2018. BoA has since made a few changes to their cards.

  • 3% cash back on BoA cash rewards card is now a choose-your-own category (rather than gas).
  • 75% platinum honors bonus is now earned at time of purchase; therefore, deferral strategies (swiping now and waiting to redeem until you have platinum honors status) won’t work.
  • Account opening bonuses are no longer amplified by the platinum honors status.

**** End 2019 update ****



Brief Rant

I think credit card recommendations one of the few sleazy parts of personal finance blogging. Given that credit card reward affiliate/referral bonuses constitute a major source of revenue for financial bloggers, you never know whether a blogger is recommending a card because it is objectively the best card or because it provides the blogger with the highest commission.

That said, this post is about the cards I choose to carry in my wallet. No company is paying me a penny to write this.


There are Two Basic Credit Card Strategies:

  1. Choose your credit card based on the best available sign-up bonus at the time.
    1. If you decide to go down this path, here is a great resource:
    2. I have a colleague who implements this strategy and has around 25 active cards. This seems ludicrous & unwieldy to me.
  2. Alternatively, sign up and use the best cards on an ongoing basis.

I don’t have much to say about Door #1 above. Doctor of Credit is going to be the best resource there. However, if you go down Door #2, then perhaps this post can help you.

For the past year I have used Bank of America credit cards exclusively. Prior to that, I exclusively used the Fidelity 2% Visa, which remains a great card to this day. With my new BoA setup, I get an average of 3.2% cash back across all of my purchases. For many readers, the 1.2% in extra bonuses offered by my BoA strategy relative to the base 2% at Fidelity won’t be sufficiently appealing to justify the few “hoops” you need to jump through to accomplish this. For me, the 1.2% increase in rewards results in an extra $450/year in tax-free rewards, not to mention almost $1.5k in sign-up bonuses along the way. Is it worth a tax-free $1.5k + $450/year indefinitely to jump through a couple of hoops? For you, it may not be. If not, go with the Fidelity Visa (or your preferred cards) and skip the rest of this article.


Hoop #1: Get $100k to Merrill Edge to qualify for “Platinum Honors” status

To implement my strategy, you first need to transfer $100k in assets to Merrill Edge to qualify for the highest tier of their preferred rewards program (link). This may initially seem like a nuisance, but it isn’t too bad. Transferring $100k from our joint brokerage account at Vanguard to our newly opened joint brokerage account at Merrill Edge was as simple as any transfer I’d ever experienced at any brokerage. It takes about 3 minutes to initiate the transfer online. Zero paperwork. Zero mailings. Zero faxes. Zero phone calls. Just a simple online request.

There are no tax implications for transferring VTSAX from Vanguard to Merrill Edge. You can continue to hold it at Merrill Edge. Dividends will be reinvested if you choose that option. However, if you want to purchase more VTSAX (outside of automatic dividend reinvestments), you cannot do so within Merrill Edge. You’d have to purchase the ETF version, VTI.

Once the $100k is at Merrill Edge, you have to wait up to 3 months for the “Platinum Honors” status to kick in since it is computed on a three month rolling average.

Once you hit this “Platinum Honors” status, you qualify for a 75% bonus on all credit card rewards. Without this, BoA’s cards would be pretty impotent.

By the way, the act of transferring $100k from Vanguard to Merrill Edge will qualify you for a transfer bonus of $250:

These bonuses will periodically increase during promotional time periods. Now is not one of those times.

If you wanted to transfer IRAs instead of brokerage accounts, you could do so. If you go down this path, your spouse’s IRA will not count towards your preferred rewards status (and vice versa). Only jointly owned accounts count towards both spouses preferred rewards statuses.


Hoop #2: Get two different types of BoA credit cards

Credit Card #1: BoA Premium Rewards (link)

Bank of America<sup>®</sup> Premium Rewards<sup>®</sup> Credit Card

  • Travel & Dining: 2% base rewards * 1.75 = 3.5% cash back with platinum “preferred rewards” status.
  • Everything else: 1.5% base rewards * 1.75 = 2.625% cash back with platinum “preferred rewards” status.

Disadvantage: $95 annual fee, though the card provides $100 statement credit on travel incidentals which can be used to purchase an American Airlines egift card which I sell on for $85. You are able to do this once per calendar year. After this nonsense, the annual cost of the card is $10. If you truly incur $100/year in airline incidentals, then you wouldn’t need to jump through this hoop. What airline incidentals get reimbursed? Check out this link at Doctor of Credit.


blankI hit the $100 benefit this year through the purchase of a $100 American Airlines E-Gift Card.

Here is the after-commission sale of the $100 gift card on for $86.


Advantage: In addition to the $100/year in airline incidentals, there is a Global Entry / TSA precheck credit every few years (which we’ve taken advantage of through my wife’s Global Entry membership). Other benefits, such as no foreign transaction fee, are described here (link).

Current sign up bonus: $500 (not amplified by 75% bonus).


Credit Card #2: BoA Cash Rewards (link)
*** Update: Reader “UsualLine” astutely points out that the default cash rewards card is now a Mastercard, which is different from when I signed up. That said, you can still get a “save the tigers” Visa card that does the same thing. See comment section for more context. ***


  • Gas: 3% base rewards * 1.75 = 5.25% cash back with platinum “preferred rewards” status.
  • Groceries/Wholesale (i.e. Costco & Walmart): 2% base rewards * 1.75 = 3.5% cash back with platinum “preferred rewards” status.
  • All else: 1% base rewards * 1.75 = 1.75% cash back with platinum “preferred rewards” status. Note that this portion of the card is inferior to the above Premium Rewards card. Therefore, we restrict our spend on the red cards to Gas/Groceries/Wholesale.


Bonus history for our red card. Note the gap in spending from 8/30 to 10/12. This is where we transition spending from one set of red cards to the other (more on this in Hoop #3 below). The 75% bonus has yet to be applied to these rewards, as they will be applied in the pictures below. As shown, Costco gas earns 3% base (*1.75 bonus=5.25%). Costco and Walmart earn 2% base (*1.5 bonus=3.5%).

Yes, we are literally at Costco every other day. Yes, the 10/18 transaction was a $1 plus tax Churro date with my daughter. The 8/21 transaction was a $1.50 plus tax hot dog date with my son.

Yes, we live in a state with oppressively high sales tax ($1.64 after-tax hot dog / $1.5 pre-tax hot dog – 1 = 9.333% sales tax applied to that purchase), property tax 2% of market value, 7% marginal rate, and expensive car registration. Mercifully, groceries are not taxed, providing some relief from the sales tax burden.

The transactions on 10/19 and 8/20 that are blurred out are a local grocery store where we buy cilantro and other random odds and ends which Costco does not sell. As shown, we deviate from Costco very infrequently for food purchases.


To receive the 75% bonus on credit cards, the rewards must be deposited into a Merrill Edge brokerage account or a BoA Checking Account. Don’t make the mistake of redeeming via statement credit or personal check, both of which will cause you to forfeit the 75% bonus.


blank  After redeeming to BoA checking, you can see confirmation of the 75% bonus applied in the top line of this screenshot.


Advantages: No annual fee.

Disadvantages: $2.5k/quarter spending cap on these good rewards. After hitting the cap, the credit card bonus on all subsequent purchases within the quarter reverts to 1%*1.75=1.75%.

Current sign up bonus: $200 (is amplified by 75% bonus) promotional rate, though this bonus is regularly $150.


Hoop #3: Defeat the $2.5k/quarter BoA cash rewards cap by getting second red card

If you are married, your spouse can also sign up for the same BoA cash rewards card. If you are single, you may need to get a second cash rewards card like the “save the tigers” version of the cash rewards card. Note that some of these “save the tigers” cards are Mastercard, not Visa, and therefore not usable at Costco.

Since my wife and I both have BoA cash rewards cards, we’ve doubled the annual cap of $2.5k/quarter to $5k/quarter. We spend less than $5k/quarter on gas & groceries, so we’re in the clear here. Note that the Premium Rewards card has zero caps on spending.

Since my wife and I have a joint brokerage at Merrill Edge, $100k in assets there will suffice for both of us (i.e. no need to store 2*$100k there).


Why I Love this Credit Card Strategy

When I pull out my wallet, the decision tree is quite simple:

  • If Gas/Grocery/Wholesale-> Use red card.
    • Costco gas counts as gas, not wholesale.
    • Walmart counts as grocery.
  • Else -> Use Grey.
    • Target does not count as grocery, so use the grey card here.

Halfway through each quarter (or earlier if we’ve hit $2.5k in spending), I swap out one set of red cards for the other (my wife and I are authorized users on each others accounts, so confusingly we have two cash rewards cards * 2 authorized user per card = 4 red cards).


Calculating the Average Cash Back on this Card

Average Cash Back % = 5.25%*(Fraction of Spending on Gas) + 3.5%*(Fraction of Spending on Grocery/Wholesale, Travel, & Dining) + 2.625%*(Fraction of Spending on All Other Categories).

Given the large amount of groceries we consume, when I plug in my numbers above I get a number (3.2%) that is unsurprisingly fairly close to 3.5%. If I did more driving and rode my bike less, this number would be even higher since the 5.25% would lift that weighted average up.


Total One-Time Bonuses for the Above Strategy

$250 Merrill Edge transfer bonus
$200*1.75 BoA Cash Rewards Card (Spouse 1)
$200*1.75 BoA Cash Rewards Card (Spouse 2)
$500 BoA Premium Rewards Card (Spouse 1)
$1,450 total rewards.

In other words, this strategy happens to leave you $1,450 richer in the process from sign-up bonuses alone if both spouses get the red card.


Another Caveat

You can defer the redemption of dollars on the red card until you hit the “Platinum Honors” status. In other words, if you are close to the $100k status but not quite there yet, you lose no bonuses (including the initial sign-up bonus) if you simply wait to redeem the cash rewards until you hit the $100k status.

The above is not true for the Premium Rewards card. With this card, you cannot strategically defer the redemption of rewards until you hit the 75% level.


A Final Caveat

BoA’s website is infuriatingly horrible; so much so that the Finance Buff has a dedicated blog post on how to set up autopay for the credit card: The good news is that once autopay is set up (much easier said than done), you’ll never have to log onto that god-forsaken site again.



If you have $100k laying around (preferably in a joint brokerage account if you’re married) transfer it to Merrill Edge & collect a few hundred dollars of brokerage bonuses in the process. Once there for 3 months, you’ll reach platinum honors rewards status. Once you have that, the above two cards are an incredible combination to maximize long-term rewards. The highest cash back you’ll receive is 5.25% and the lowest is 2.625%, with a weighted average across all categories coming in at 3.2% for me. After taking advantage of the airline incidentals offered by the Premium Rewards card, there is no annual fee for this strategy.




**** Update 12/10/2018 ****

As of 12/10/2018, BoA announced a significant change to the cash rewards card (the red one) which will begin in mid-January, which alters the the 3%(*1.75) category from gas to the user’s choice of:

  • Gas
  • Online shopping
  • Dining
  • Travel
  • Drug stores
  • Home improvement and furnishings

This introduces some interesting strategic moves, such as one spouse selecting one category while the other spouse selecting another. 

More discussion here:




28 thoughts on “Best Credit Card Rewards Strategy – 2018 Edition”

    • I didn’t even notice that until your comment. When I signed up, Visa was the default BoA cash rewards card. It looks like that is no longer the case.

      That said, there are plenty of Visa options at this link: The breast cancer, save the tigers, and the us pride card are visa. It’s my understanding that there are zero differences in bonus structure across the Visa and Mastercard versions of this card.

  1. Great blog! I really appreciate your honest insights. For those who don’t have $100k or do not wish to utilize Merrill Edge, is Fidelity 2% still the best alternative? Any others you know that worth pursuing?

    • I’ve considered that card in the past. A quick query on Personal Capital says that I’ve spent $453.16 at Amazon in the past 12 months. At that level of spend, I’m forfeiting $453.16(5%-2.625%)=$10.76/year in benefits by introducing the Amazon card to the system. For me, that’s insufficient for me to justify the added complexity. I find that eBay (or or Newegg or BH Photo) is a much better deal these days for the same product.

      That said, I appreciate the suggestion and remain open to improvements.

      • I don’t know much about Merrill Edge. If one has a traditional IRA with them are their low cost passive total stock market index funds with them like with Vanguard ?

        • They’re a good brokerage. With $100k in assets you get free trades. You can buy Vanguard ETFs with these free trades but not Vanguard Index Funds, since index funds can only be purchased at Vanguard (unless your 401k/529/etc provider has an agreement with Vanguard).

          For me, I slightly prefer index funds to ETFs (, so I simply transferred 100k of VTSAX from Vanguard to Merrill Edge and will keep it there indefinitely. All future trading will occur outside of Merrill Edge (i.e. Vanguard or Fidelity).

  2. This is great! A couple of questions.
    1. Do you first need a BofA bank account? It looks like you do – so do you open that first, then put the $100K in Merrill?
    2. If the market drops and your balance goes below $100K, are you adding more to Merrill to keep the $100K balance?

    • 1.) Yes, you need a BoA bank account. I should have added this as another hoop, but it is an incredibly minor step. No minimums/fees so long as you have assets at Merrill Edge. We keep $20 there in perpetuity. Any time rewards are dumped in there, we pull directly to Vanguard brokerage. In other words, the only purpose of the account is to receive bonuses. Much like my Fidelity brokerage account has only served to receive my 2% cash bonus for a decade or so.

      2.) It’s computed on a 3 month moving average. If your balance was $110k, $105k, then $95K, your status will be compute as (110+105+95)/3. It’s computed on the balance as of the 5th(?) of each month. If you loose the 100k status temporarily, it’s no big deal as you can defer redemptions on the red card until you get back up. With the grey card, you’ll temporarily lose the 75% rewards and receive 50% rewards instead.

  3. A few simpler alternatives requiring no accounts with invested money, with either no annual fee or minimal:

    – American Express Blue Cash Preferred: 6% on groceries,
    $95 annual fee. Do the math, generally easily pays off

    Uber Visa: 4% on all dining and …Uber rides! No fee

    PenFed Credit Union visa platinum: 5% on gas, no annual fee

    Alliant Credit Union Visa: 3% on EVERYTHING first yr; 2.5% after first yr. No fee first yr; $59/yr after

  4. Hi frugalprof. What are the basis reporting implications of the asset transfer if you transfer a taxable account? I’m currently at Vanguard and they seem to have a fairly user friendly approach for tracking and reporting basis. You might want to encourage your readers to make sure they have updated and accurate basis info from the old brokerage account before they implement your strategy and complete their transfer to Merrill Edge. I’m curious about what the basis reporting will look like on a Merrill Edge 1099 if/when the transferred assets are eventually sold.

    • Scott, thanks for the comment. The cost basis transferred flawlessly without a single hiccup for me. I agree it would be problematic if the basis didn’t transfer over.

  5. Great writeup! Thanks for the informative post.

    I’m currently in the process of setting up my accounts to qualify for platinum honors status.

    In regards to the credit cards, how far apart did you sign up for the cash rewards and premium rewards cards, and were they instantly approved? I attempted to sign up for both cards on the same day as I read that there would be only one hard pull in that case. I signed up for the Cash Rewards card first and received instant approval. The Premium Rewards card, however, is in the “In Review” stage. It did not result in a hard pull.

    Credit score is 820+ with no other cards signed up for in over 24 months. I’m definitely within the BoA 2/3/4 rule, so hopefully it will get approved.

    • I signed up for 3 cards the same day (2x cash rewards (same card) + 1x premium rewards). I was denied one of the cash rewards cards because it was an identical card to the other and the system treated it as a mistake. So we signed my wife up for the cash rewards card and it solved the problem.

      I seem to recall having a similar issue to you. I called the “reconsideration” phone number found on Doctor of Credit’s website and customer service confirmed that I was approved for both cards even though the online system said the second was “pending.”

      I hope you like the setup as much as I do. I don’t think there is a better credit card system in existence right now, particularly for Heavy Costco shoppers like myself.

        • An update on my previous post. I called the Bank of America credit analyst line. A credit analyst picked up the phone immediately and was able to help me with approving the account. They needed to perform a few credit identity verification steps. Once that was done, I received an email with approval within a few minutes.

          • Glad it worked out for you. Now that you mention it, that was my exact same experience. Hope you enjoy the new cards.

    • For me, this strategy is the best on the planet right now. I assume it would be for many others, provided they have $100k to park at Merrill Edge.

  6. would the below work:
    ML :200K Individual
    Bofa Checking 1: Individual
    Checking 2:Joint with spouse

    in above setup are both platinum honors eligible?
    if yes, if both apply for Bofa credit cards would it be eligible for platinum honors bonus?

    • Assuming ML = Merrill Edge, I don’t think the spouse would qualify for platinum honors because they don’t have $100k in their name.

      If you add your spouse to the brokerage at ME, you’d be good to go. In fact, you’d be good to go with $100k at ME, which is what my wife and I do.


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