My First Credit Card: Bank of America Cash Rewards Credit Card
Good morning and happy weekend! It was a busy week for myself, so I’m posting after a couple of days. I hope you have enjoyed the first fortnight of this website, and have understood the basics to “penny pinching” appropriately. Now we will move on to our credit card reviews and we will start with the first credit card I ever received in USA, the Bank of America Cash Rewards Credit Card.
Key Features
Here are the facts:
- This is a no annual fee card (we can talk about the misconception that these cards are better at another time)
- $200 cash rewards bonus after making at least $1,000 in purchases in the first 90 days of your account opening (this is standard for most credit cards to give a bonus, but a little low)
- Earn 3% cash back in a category of your choice out of gas, online shopping, dining, travel, drug stores, or home improvement/furnishings and 2% cash back at grocery stores and wholesale clubs on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then earn 1% (meaning you can only get 2-3% cash back on eligible purchases up to the first $2,500, you can’t spend $4000 on gas and get 3% back, you would only get it on the first $2500 and after it would be 1% for the remaining $1500.
- Introductory 0% APR for your first 15 billing cycles for purchases, and for any balance transfers made within 60 days of opening your account. After the intro APR offer ends, a Variable APR that’s currently 15.74% to 25.74% will apply. A 3% fee (min $10) applies to all balance transfers. (This means you don’t pay interest on new purchases or balance transfers for the period described, but you still need to pay the minimum payment. For more on this see this excellent FAQ section)
- No expiration on rewards (and a potential to earn more depending on other relationships with Bank of America)
Pros
With no annal fee, and an affiliation with a big national bank, this is a great credit card to start off with when establishing a credit history.
The 0% APR gives you breathing space if you need to make big purchases in the first few months of moving and waiting for the first paychecks to arrive.
The no annual fee allows you to get back cash for expenses you WOULD (please note that key word) have made with no worry about are you breaking even on your returns had you paid an annual fee. It also means you can choose to spend as little or as much as you want.
Now when I initially got this credit card in June 2016, the 3% category available was only gas. In January 2019, this was changed to the options above. Now if you don’t have a car (which is your gas category) you can utilize the travel category on Uber/Lyft/Greyhound/NJ Transit etc. Now for a new immigrant to the country, tracking your expenses is key to working out what exactly are your expenses. As discussed, if paying your rent through a credit card is an option, great, if not your next potential credit card expenses are getting to work (gas/travel), food (groceries/dining) and fun (online shopping/travel). You also when first moving may have need to utilize the home improvement/furnishings. Drug stores, I hope you never need to use (health wise!) but I tend to think whatever you would get from there you can get from groceries.
With this in mind, you can see how the 3% category of your choice can be helpful (note you can only change it once a month, so plan ahead) as well as the 2% grocery category especially for the new arrival. These can then be redeemed as statement credit or as a cheque into your account.
What about Seasoned Bank of America Customers?
I had a colleague (American) who had been with Bank of America (B of A) for most of his young professional life and had a significant amount of money in his Checking and Savings account through family. This meant he was part of the Preferred Rewards program, which depending on the grade (amount you have with B of A), you can get an additional percentage of cash back. If you have Gold, Platinum, or Platinum Honors you will have 25,50 and 75% more (“boost”) respectively in cash back. For example if you had 100,000 dollars in your combined accounts that 3% category is now, 5.25% for your gas (as an example), 3.5% for the 2% groceries, 1.75% for the rest which would have been 1%. These percentages are some of the best that you will get, but of course you need to have money in the accounts (which in this age are not getting any interest!)
| Combined balance necessary to be eligible | New rewards rate on 3% categories | New rewards rate on 2% categories | New rewards rate on 1% categories | |
| Gold (25% extra) | $20,000-$49,999 | 3.75% | 2.5% | 1.25% |
| Platinum (50%) | $50,000-$99,999 | 4.5% | 3% | 1.5% |
| Platinum Honors (75%) | $100,000 + | 5.25% | 3.5% | 1.75% |
Categories
You can reference the issuer’s website for what merchants qualify for the categories you are considering. For example, for gas, the main supplies such as Exxon, BP and Shell are considered. For online shopping, Macy’s, Target, Dick’s (I got a great deal with them recently when combined with Rakuten, the 3% back and their own limited time offer), Best Buy, Amazon and Apple are all eligible. I would still be very careful when going to a merchant as sometimes they do not classify something as you would have expected. For example, one small grocery store (more of a convenience store) didn’t come under “Groceries” in my local area, and as I have an abundance of options and they weren’t particularly cheap anyway, I don’t go there.
Cons/Alternatives to consider
Although, there aren’t really cons per say, you may want to consider alternatives if you are a big spender as you will be capped at how much cash back you can get or you simply don’t utilize those categories as much. Other alternatives are the Citi Double Cash Card as this offers unlimited 2% cash back (assuming you will pay it off on time) and another option (which I have) is the Discover it Cash Back which is a rotating cash back credit card where the categories will be 5% but they are only for certain quarters. I will do another article on that later. The good thing about Discover is that whatever cash back you earn, for the first year, they will match it, essentially giving you 10% cash back if utilize categories appropriately at different times of the year.
The other reason to think of alternatives is that if you are selecting a credit card for categories only there may be much better cards out there, some with an annual fee which may be worth it the fee. I will do something on categories at some point and which credit cards are better for which category.
How does the Penny Pinching Doc use this card?
For me as I don’t have a car, I have the online shopping as my 3% as I can use my Chase Sapphire Reserve for dining and travel. I don’t have a good grocery card so I use this currently. I no longer bank with B of A, but I still use this credit card for online shopping and groceries.
Conclusion
This is my first credit card, and do feel very nostalgic about it. I think for your first credit card this is a great card to utilize and maximize with the knowledge that you know of it. However, there are other options and as I don’t have a car the “gas” category doesn’t appeal to me that much. However for starting off, and for those who are frugal spenders, this is an excellent choice.