Banking on Loyalty: Premium Reward Points for Preferred Rewards Customers

by on Oct 06, 2017

After long standing on the sidelines, Bank of America entered the competitive premium card market with the introduction of its Premium Rewards card. In recent years, many firms have issued premium cards with exorbitant initial spend offers, aiming to be at the top of every customer’s wallet. In a market already saturated by highly popular products, such as Chase’s  Sapphire Preferred card  or  Capital One’s Venture card, how will the Premium Rewards card gain significant market share?

The card has a similar structure as the Sapphire Preferred card, including an annual fee of $95, accelerated earnings of two points per $1 on dining and travel expenses and a 50,000-bonus-point initial spend offer. While there are slight differences between the Premium Rewards card and its competitors, the differences are not enticing enough to seriously attract non-Bank of America banking customers. However, for BofA clients, the Premium Rewards card stands out when combined with the Bank of America Preferred Rewards program.

Premium Rewards Card

The Preferred Rewards program, for customers with assets of least $20,000 at the firm, offers better rates on a wide array of firm products, with increased rates for customers who meet higher asset requirements of $50,000 or $100,000 (Preferred Rewards customers will receive an extra 25%, 50% or 75% of points depending on their tier in the program). While the firm’s other credit cards also benefit from the Preferred Rewards program, the card’s target audience—high-asset customers—are already well-positioned to receive these benefits. By offering an enticing earnings structure through its Preferred Rewards program, Bank of America aims to keep these customers from getting premium cards at other firms. For example, Platinum members receive 3.5 points per dollar on travel or dining and 2.625 points per dollar on everything else. These rates prove to be superior to almost any credit card, including ultra-premium cards with annual fees of $450.

With the explosion of credit card initial spend offers, it’s proven difficult to keep customers from ditching their cards for a juicy new option. To mitigate this issue, Bank of America offers bonus rewards to lure high-asset customers away from third-party premium cards and keep them satisfied with its internal offerings. The Premium Rewards card’s value is highest for Bank of America and Merrill Edge customers, proving that Bank of America aims to foster loyalty and deepen relationships with current customers.