In what can only be described as a radical departure from its longstanding tradition of terrible credit card offerings, Bank of America has introduced a brand new credit card that is arguably not terrible.
It’s called the “Better Balance Rewards” card, and boy is it strange. Cardholders earn $25 each quarter when they “pay more than the monthly minimum and pay each bill on time” and another $5 per quarter if they also have a “qualifying” (checking, savings, or retirement) account with BoA. The card has no annual fee.
The key here is that you have to spend more than the minimum payment each month, which, as a practical matter, means that you have to spend more than $15 each month. Spending less than $15 won’t work because, in that case, your minimum payment will be equal to your balance and you cannot pay more than your outstanding balance. So a cardholder could presumably spend $20 on the card each month (though as little as $15.01 should work), and earn $100. Needless to say, that’s a great return on $240 of spend.
But is it worth applying for? Perhaps. On one hand, if used tactically, the card will essentially pay you $100 each year and costs you nothing to own. And there’s certainly nothing wrong with a free $100 each year. That said, I’m still not sold on the card because (a) I wouldn’t actually use the card (aside from the $20/month), and (b) when I apply for a credit card purely for a bonus I expect at least $500 worth of value, and I simply don’t believe that the terms of the Better Balance Rewards card will last long enough for me to recoup my $500 opportunity cost. In fact, I’d imagine that these $25 quarterly bonuses will be ratcheted down or entirely eliminated within a few years.
Note: I certainly wouldn’t recommend opening a BoA checking or savings account for an extra $5 of rewards per quarter. BoA checking accounts require you to either jump through hoops or pay a monthly fee, and BoA savings accounts are downright pathetic. You’re much better off with Ally Bank on both fronts.
Either way, this is certainly an interesting experiment by Bank of America. They’re banking (sorry) on the profits generated by “legitimate” cardholders far outweighing the losses generated by people who use the card as I’ve outlined above. Perhaps they’ll be proven correct; perhaps not. What do you think?
Hat tip: Wallaby