One month review of updated BoA Cash Rewards Card

**** This post has been superseded by these ones: ****


What Changed?

A month ago, Bank of America updated their policy for the cash rewards card. Prior to the change, the rewards were as follows on the cash rewards card:

  • 3%*** gas
  • 2%*** grocery/wholesale
  • 1% all else

Last month, this changed to:

  • 3%*** of the user’s choice of (select one of the following):
    • gas
    • online
    • drug store
    • home improvement
    • travel
    • dining
  • 2%*** grocery/wholesale
  • 1% all else

*** Note that spend on the 2% and 3% categories cannot exceed $2.5k/quarter. Once spending on those categories exceeds $2.5k/quarter, all subsequent spending goes towards the 1% category.

With “Platinum Honors” status ($100k of assets at Merrill Edge), each of these categories is multiplied by 1.75 (i.e. 3% becomes 5.25%, 2% becomes 3.5%, and 1% becomes 1.75%).


My Experience the Past Month

After the change was implemented, there is a bit of an arbitrage. The arbitrage is that the “online” category opens up the world of opportunities for 5.25% cash back. Over the past month of experimentation, here is my experience.

What counts as “online” transactions (and thus qualifying for 5.25% cash back):

  • Costco Cash Card (usable at in-store Costco for gas & grocery)
  • Walmart grocery
  • gift cards
    • Opening up the universe of egift cards to retailers who sell there (restaurants, airlines, etc). Egift cards are instantly delivered
  • Amazon
  • eBay transactions (where payments are made directly through eBay rather than PayPal)
  • Though I haven’t tested yet, I’m sure lots of other online retailers (such as and picking up in store)

Ebates stacks on top of Raise (1%), eBay transactions (2%), and others, so that’s icing on the cake.

What does not count as “online” transactions:

  • Online payment to doctor (obvious, but given our medical expenditures I had to try at least once)


Average Cash Back Going Forward

Given how much we spend at Costco as a fraction of our annual household spend, our weighted average rewards going forward will now be calculated as:

Average Cash Back % = 5.25%*(Fraction of Spending at Costco or Online Retailers) + 3.5%*(Fraction of Spending on Dining or travel or non-Costco groceries) + 2.625%*(Fraction of Spending on All Other Categories).

Average Cash Back % = 5.25%*(70%) + 3.5%*(5%) + 2.625%*(25%) = 4.5%.

I anticipate earning 4.5%, on average, across all expenditures in a year. Not too shabby at all. Aside from the “CC rewards” line item in the monthly financial update, I’ll post an annual credit card rewards summary going forward.


Wrapping it Up

In summary, the recent change to the BoA cash card makes it even that much more lucrative to jump through the required hoops detailed more fully in my post from a few months ago (


Screenshots for the Curious

5.25% on a $1k Costco Cash card purchased online (a tradition I expect to continue monthly). 1.75% on payment to allergy doc (a long shot, I realize, but I had to give it a try).


5.25% on a $15.88 eBay transaction to Timex, 3.5% on $49.16 grocery store transaction, 3.5% on $14.26 Costco transaction (before Costco Cash cards arrived in snail mail), 5.25% on $10.58 Amazon Marketplace transaction.

13 thoughts on “One month review of updated BoA Cash Rewards Card”

  1. Excellent review. Curious how you allocate the 100k? I looked around and didn’t see any mutual funds with resonable fees as most were around 1%. Seems like it would only be worth it to own individual stocks.

    • 100% VTSAX. If I were to do it again from scratch, I’d hold ETFs in my ME account since there is a $20 transaction fee for mutual funds and a $0 fee for ETFs. This can be easily remedied on my end by transferring the $100k back to Vanguard, converting VTSAX to VTI (no tax implications), then transferring VTI to Merrill Edge.

  2. Great review of the benefits of the Cash Rewards card.

    As an executive member, do you get the 2% cash back if you use a Costco Cash Card? If so, does this mean you’re getting 5.25% back on the Cash Card you purchase, plus an additional 2% rebate by being an Executive member? That would be an incredible deal if it works like that!

    • Yes, this is my understanding. The 2% executive membership points don’t accrue when I purchase the Costco cash, but rather when I use the Costco cash at checkout in-store. Otherwise, there would be a double-counting issue.

      The BoA is the best CC on the planet right now, so long as you have $100k at ME to get the 75% rewards. I’m amazed it isn’t more popular among the blogging community. Perhaps it’s because of poor credit card commissions for BoA (I have no idea b/c I don’t do that nonsense). No annual fee. The only deficiency is the $2.5k/quarter limitation on the good rewards (i.e. anything greater than the base 1%*1.75=$1.75%), but this can be defeated by getting multiple of this card (basic, MLB, save the tigers, USA eagle, etc). Our household currently has 3 copies (2xbasic + save the tigers). All Visa for Costco.

  3. Where do I purchase an American Airlines e-gift card so I can be given a $100 statement credit on travel incidentals with my BoA credit card premium rewards? I understand I’m to sell it on Raise once I have it, but do I buy one at Raise and then turn around and sell it on Raise?

  4. Hi Frugal Professor, I’ve enjoyed browsing this website, which has alerted me to how much further one can improve one’s finances with attention to detail. I’ve just transferred assets to Merrill Edge to gain platinum rewards status on the Bank of America credit cards.

    My current situation is rather similar to what yours might have been a couple years ago: mid 30s, academic job paying $180K/year, married with a few kids, 500K net worth, approximately 80K between cash (very little) and taxable brokerage. My strategy over the past couple years has been to contribute moderately to retirement accounts and build up this taxable brokerage account as an emergency fund. But I’m curious whether this is playing it too safe, and whether I should be trying to make up for lost time through heavy 529 and Roth IRA contributions or just changing the strategy going forward. I have been maxing out HSA at least.

    I could tell you more information if you are interested in this as a case-study.

    One of my biggest financial regrets, which still haunts me: gradually selling off taxable investments in grad school several months in advance of a first-time house downpayment just in case the market had a large downturn, not realizing that the relatively large capital gains would disqualify me from EITC.

    • American Dad,

      Glad you stopped by and found the website to be somewhat amusing. You’re indeed right that the small things add up. I just signed up for my fourth BoA Cash Rewards Card (in addition to the one BoA Premium Rewards Card). It’s the best CC system on the planet yet nobody is talking about it.

      I almost lost the EITC due to cap gains during grad school. My condolences on getting creamed there. I blogged about my experience here:

      With respect to your situation, you indeed sound a lot like me. With respect to an action plan for you, I’d recommend the following (consistent with this advice:
      * Ignore the idea of a dedicated emergency fund. Those are useful for people living paycheck to paycheck. You aren’t one of those people. Use credit card float as your + Roth IRA (or existing brokerage assets) as your emergency fund going forward.
      * Don’t contribute a penny to taxable brokerage accounts (or 529 accounts) until you have maxed out both (presumably backdoor based on income) Roths.
      * In my own situation, I’m on the fence between superfunding a 529 vs funding taxable brokerage. There are countless Bogleheads threads on the topic that would be worth perusing.

      I hope that helps. I’m happy to elaborate a little more if you think it would be useful to other readers. You can email me more info at [email protected].

  5. Does this change cause you to change your stance on “Red” vs. “Grey” cards? from your “Best Credit Card Rewards Strategy – 2018 Edition” article?

    I think I answered my own question after looking again… No it doesn’t. The Grey Card – BOA Premium Rewards gives 2.65% on Everything Else (1.5% * 1.75 Platinum Rewards), while the Cash Cards are 1.75% (1% * 1.75 Platinum rewards).

    This makes sense if you have enough Cash cards with the 3% select a category to meet your needs to get 5.25% where you can. Regardless, the Premium Rewards card still is more than my 2.2% Barclays card. Time to crunch some numbers on how what Cash Cards would be useful.

    Thanks for the article.

    • My new strategy is the following:

      BoA “red” card (BoA cash rewards and associated branded permutaitons) = 5.25% cash back on online, travel, gas, or whatever category I set it to. Online is most lucrative since it’s the broadest and allows for arbitrage (, Costco cash, in-store pickup at a host of B&M retailers). No annual fee is great. $2.5k spending limit/quarter is lame.

      BoA “grey” card (BoA premium rewards) = 2.625% minimum on all purchases + 3.5% on dining & travel. $95 annual fee is somewhat of a nuissance. Uncapped spending limit is great.

      If you want a single card in your wallet, the BoA premium rewards is probably the way to go, particularly if you are a big spender. I recently advised my father to do so for the sake of simplicity. However, if you don’t mind optimizing a bit more (like me), then the BoA premium rewards + BoA cash rewards offers the best of both worlds. That’s how I get my weighted average rewards in the neighborhood of 4.5% – by allocating all of my eligible spending towards the BoA cash rewards cards and having multiple of them to defeat the spending cap.

  6. Thanks. My wife values simplicity over all things. I value simplicity but like the bonus of a bit of added optimization. Even the BoA Premium 2.625 alone will beat our Barclay’s Arrival 2.2%. We have 2 other BoA Cash cards we will have to look at closer.

  7. Professor, can you buy the Sam’s and Costco cash cards in the store and it count as an online purchase ? I have done so online and got the 5.25% BAC cash back, but didn;t think you could get online purchase credit for buying a cash card in the brick and mortar store.

    • My experience is identical to yours: You get the 5.25% cash back via the online but only the 3.5% in store. Unless you purchase the costco cash card online and use in store, which would give you the 5.25% cash back in store (via the back door).


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