Bank of America launches new luxury credit card and expands its Preferred Rewards program

Bank of America is getting into the luxury credit card space with its new Bank of America® Premium Rewards® Elite credit card. The Premium Rewards Elite Credit Card, which launched on November 22, has a $550 annual fee and offers 2X points on travel and dining and 1.5X points on all other eligible purchases (with 25% to 75% more cash back for Bank of America's Preferred Rewards members).

The credit card issuer isn't the only issuer to enter into the luxury credit card space this year: The Capital One Venture X Rewards Credit Card comes with a $395 annual fee card with a host of perks like a $300 Capital One Travel credit to use toward purchases made through Capital One Travel and a yearly anniversary bonus of 10,000 bonus miles (equal to $100 towards travel). See rates and fees. It's already a crowded market with popular choices like the Chase Sapphire Reserve® and The Platinum Card® from American Express. Terms apply.

Below, Select looks at the features of the Premium Rewards Elite card and the changes to BoA's Preferred Rewards Program to help you decide whether the Premium Rewards Elite card is better for you than other luxury cards on the market.

The Premium Rewards Elite Card has a steep $550 annual fee, but it comes with a host of perks. Cardholders get a $300 annual airline incidental credit and a $150 annual lifestyle credit. The Premium Rewards Elite Card offers 2X points on travel and dining and 1.5X points on all other eligible purchases to all cardholders. The redemption value is one cent per point. 

The Premium Rewards Elite Card has a decent welcome bonus: Cardholders can earn 50,000 points (worth $500; but can be worth up to $600 if redeemed for travel) if they spend $3,000 within 90 days of account opening. Yet the welcome bonus is not as generous as other existing offers

For example, the Citi Premier® Card has a $95 annual fee card and a more lucrative welcome bonus (see rates and fees). New cardholders can earn 60,000 ThankYou® bonus points (worth $600 in gift cards when redeemed at thankyou.com) when they spend spend $4,000 in eligible purchases within the first three months of account opening. Plus, for a limited time, earn a total of 10 ThankYou® Points per $1 spent on hotel, car rentals, and attractions (excluding air travel) booked on the Citi Travel℠ portal through June 30, 2024. And the Sapphire Reserve has a welcome bonus of 60,000 bonus points (worth $900 if redeemed for travel through Chase Travel℠) after you spend $4,000 on purchases in the first three months of account opening. The Premium Rewards Elite Card welcome bonus is okay, but given the high annual fee, there are other cards that offer bigger welcome bonuses and better perks.

Yet the card's perks may not justify the fee for many people. While the Premium Rewards Elite Card has an up to $300 annual airline incidental statement credit and a $150 annual lifestyle statement credit, the airline incidental statement credit is not like the travel statement credit offered by cards like the Venture X or the Sapphire Reserve. 

The Venture X offers cardholders an up to $300 annual credit for travel, like flights and hotels, booked through the Capital One Travel Portal. The Sapphire Reserve also offers a $300 reimbursement for travel purchases, and you don't have to even book through Chase Travel℠.

With the Premium Rewards Elite Card, you get an airline incidental credit that can only be used on purchases like seat upgrades, baggage fees and airline lounge fees. If you prefer a luxury credit card with a flexible travel credit, the Premium Rewards Elite Card is not the best option for you.

The Premium Rewards Elite Card also has with a $150 annual lifestyle statement credit, which can be used for select streaming services, food delivery, fitness subscriptions and ridesharing services — and a $100 statement credit for Global Entry or TSA PreCheck® membership (once every four years). Cardholders will receive Priority Pass Select Lounge access. 

There is also no 0% Introductory APR period for the Premium Rewards Elite Card, so the interest rate on purchases and balance transfers can range from 18.99% to 25.99% variable.

The Premium Rewards Elite Credit Card is essentially a luxury version of the Bank of America® Premium Rewards® Credit Card. The Premium Rewards card has a $95 annual fee, no foreign transaction fee and offers perks like an up to $100 airline incidental statement credit and an up to $100 statement credit for TSA PreCheck or Global Entry Application (once every four years). 

The Premium Rewards card also has the same cash-back rate as the Premium Rewards Elite Card: 2 points for every dollar spent on travel and dining purchases and 1.5 points for every dollar spent on all other eligible purchases (25% to 75% more cash-back if you're a Preferred Rewards member). In other words, the majors benefits of the Premium Rewards Elite card over the Premium Rewards card are the airline incidental and lifestyle credits, so if those credits aren't worth much to you, you might consider the Premium Rewards Card instead.

You can redeem points for travel, cash back, a statement credit, experiences or gift cards. If you redeem your points for airfare using the Bank of America Travel Center or concierge, your points will be worth 20% more or 1.2 points per dollar.

The real benefit of the Premium Rewards Elite Card is for Preferred Rewards Program members. In order to be eligible for the Preferred Rewards program, you must hold a three-month combined average daily balance of $20,000 or more in a BoA deposit account and/or Merrill investment account. 

If you're a Preferred Rewards program member, you can earn up to 75% more cash-back with the card. Here's how the additional cash-back breaks down by tier:

• Gold tier rewards member, with at least $20,000 in deposit or investment accounts, is eligible for 25% more cash-back
• Platinum tier rewards member, with at least $50,000 in deposit or investment accounts, is eligible for 50% more cash-back.
• Platinum Honors tier, with at least $100,000 in deposit or investment accounts and above, is eligible for 75% more cash-back. 

BoA announced that it would be creating more tiers of the Preferred Rewards Program. The Diamond tier is available to people with $1 million or more in deposit and investment accounts and the Diamond Honors tier is for those with $10 million or more. Diamond and Diamond Honors tiers will also receive a higher interest rate on Bank of America Advantage Savings accounts and a reduced annual fee for Merrill Guided Investing accounts.

For Platinum Honors tier members and above can earn 3.5 points per dollar spent on travel and dining purchases and 2.62 points per dollar spent on all other eligible purchases on the Premium Rewards Elite Card.

If you're looking for a new premium travel credit card, the Premium Rewards Elite Card pales in comparison to many of the other luxury cards available on the market, especially because of the airline incidental credit's limited use and the lack of airline and hotel reward loyalty transfer options for Bank of America rewards points. Preferred Rewards members will receive higher cash-back rates, but in order to become a Preferred Rewards member, cardholders will need at least $20,000 in deposit and investment accounts through Bank of America and Merrill.

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Information about the Bank of America® Premium Rewards® Elite credit card, Bank of America® Premium Rewards® Credit Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.