This week Bank of America launched their newest credit card, known as the “BankAmericard® Better Balance Rewards™ card.”
As the name implies, the new credit card rewards cardholders who manage their outstanding balances more responsibly, which is a somewhat novel approach in the credit card industry.
Typically, it’s quite the opposite, with cardholders generally only receiving rewards for spending on their cards, whether or not they can actually pay for those purchases down the line.
Clearly this can lead to some problems if customers overextend themselves, which eventually translates to losses for the issuing bank.
Bank of America Better Balance Rewards Card Features
Let’s get to the nitty gritty of this new credit card to see if it makes sense for consumers.
– $25 quarterly cash reward when credit card payments are made on time and for more than the minimum amount due
– Additional $5 quarterly reward just for having another BofA account, such as checking or savings account
– Cash rewards can be automatically credited to card balance to reduce outstanding debt even more
– 0% APR for 12 months on purchases and balance transfers (3% BT fee)
– All with no annual fee
So dissecting the numbers a little bit, you’d be looking at $120 in cash rewards ($30 per quarter) if you met all the requirements listed above.
For the record, you need to make ALL of your monthly credit card payments on or before the due date and ALL must be for more than the minimum payment due during the quarter to receive the bonus.
In other words, if you neglect to make one payment above the amount due during the quarter, the bonus is nullified. So it takes a little bit of work on behalf of the cardholder.
And if you put the rewards toward your outstanding credit card balance (assuming you carry a balance), you’ll save even more money by avoiding costly finance charges.
Tip: The default delivery of the reward is a statement credit, so clearly BofA wants it to go toward paying down your debt.
Is Bank of America Encouraging Debt?
Somewhat ironically, the Better Balance Rewards card could actually promote carrying a balance.
Why? Well, you MUST have a balance and payment due in each of the monthly billing cycles of the calendar quarter to be eligible for the cash reward in the corresponding quarter.
So if you pay off your credit card in full, or simply don’t charge anything in a given month, it will result in no payment during one of those months, meaning your reward goes bye-bye.
In that sense, Bank of America kind of expects you to carry a balance, or always be spending.
It’s not a conspiracy or anything, but it did make me think twice.
Are You Better Off With Cash Back Rewards Instead?
While the balance reducing rewards seem like a no-brainer, as you don’t really need to do much more than make slightly larger monthly payments, it may not be the best deal.
Just look at the BankAmericard Cash Rewards credit card, which comes with a $100 opening bonus and 1%, 2%, and 3% cash back tiers.
Assuming you spent $1,000 a month on that card, you’d earn a minimum of $120 cash back, but likely more because of the higher cash back tiers at gas stations and grocery stores.
And with the $100 opening bonus, you’d be looking at an annual reward more than double what you’d get with the Better Balance Rewards card.
So while it may promote more responsible spending, you could actually be missing out on better rewards.
In fact, if you went with another cash back credit card, such the Blue Cash Everyday Card from American Express, you could earn even more.
That said, be sure to shop around to see what makes the most financial sense for you, without having to jump through any hoops or see your rewards vanish just for failing to meet a requirement.