In the credit card universe, Bank of America is perhaps the most underrated. Despite being the 3rd largest credit card issuer in the United States of America, and bearing a really cool name, they are not often known for generous credit card offers. I wish they did a better job promoting their products since some are quite exceptional. One such an example is the BankAmericard Cash Rewards secured credit card.
They say a hero needs a sidekick, and on my credit journey the secured card has been with me all along, though it has now graduated to a regular credit card. Though I am no longer using the card on a regular basis, for the 9 months when the card was my one and only, I pushed a lot of money through it and reaped quite some rewards. Bank of America has the card’s awesome features to thank.
As I mentioned in my previous post on options for credit builders, a secured credit card is a good way to start building credit. Unlike for a regular credit card where the limit is set based on your creditworthiness, you use your own money to create a credit limit for a secured credit card. The credit limit given to you is the amount of money you deposit at the credit institution. In case the card is misused, the deposit money will be used to cover losses, and that is why the card is called “secured”.
You will not find the exact same card on Bank of America’s official link. Notice that nowhere on the page is it mentioned that the card is a reward card. If you apply online you can only get the normal non-reward card. When I applied in a branch, the personal banker somehow managed to get me the cash rewards version without me specifically asking for it. When you apply in person, make sure to communicate that you want the cash rewards version. Otherwise, after applying and obtaining the card you can call Bank of America at this number: 866-421-8153 to request the cash rewards package to be added.
Like any other secured credit card, the BankAmericard Cash Rewards secured card requires a collateral deposit. Think of this deposit as a checking deposit locked for one year: you cannot touch it, you cannot spend it, you cannot withdraw it, but it is still yours. Should you decide to cancel the card early you will get the deposit back in full; however, you will also lose any history associated with the card, so unless you urgently need the cash don’t do it.
The limit on the card is determined by the amount you deposit, ranging from $300 to $10,000. If you have money to put aside for a year, I would suggest a limit as high as possible, for four reasons. First, a higher credit limit will look more impressive for your future credit applications. Second, a higher limit will allow you to make larger purchases. Third, a higher limit will result in a lower credit utilization ratio which will make your credit profile look better. Fourth, if you decide to raise the limit in the future you will get a hard inquiry which will slightly damage your credit profile for 2 years.
I have also heard that if you apply for a regular Bank of America credit card as your first card and do not get approved they will offer you a partially secured card: for a limit of $500 you will only need to deposit $99. I tend to think that $500 limit is too low, but that is a good option for those without much cash in hand.
Apart from being one of the very few secured credit cards that offer rewards, what makes this card stand out is its reliable record of graduation: as long as you maintain your card adequately for one year, and sometimes even less, it will become an unsecured card. That means the card will be reported as a normal credit card and the deposit will be returned to you. Most other secured cards don’t automatically graduate within one year. Some of them never graduate; you’d have to cancel if you want the deposit back.
When the card graduates, the annual fee normal will carry over, but not to worry: you can call Bank of America at 866-421-8153 to permanently remove the annual fee for you. That is exactly what I did. You can read further about my experience in my previous blog post: https://hiepsfinance.wordpress.com/2013/01/01/secured-credit-card-graduation/
The only weakness of the card is that it is reported as a secured card, just like most other secured cards, while a few of the other cards such as the Capital One secured credit card are not reported as secured. If you apply for a second card before the card graduates, the credit analyst will be able to see its secured status, which may matter or not depending on the credit department’s underwriting criteria.
The annual fee is $39, and there is no promotion on the card. Otherwise it is almost exactly the same as the regular BankAmericard Cash Rewards card.
I. It is a cash back-type rewards card
(For more information about different types of credit card rewards, please read my previous post )
- Cashback formula: 2% on groceries and 3% on gas for the first $1,500 in combined gas and grocery purchases each quarter, and 1% on everything else. The bonus categories likely account for the majority of your everyday spending, so they are very useful.
- Cashback redemption options: statement credit or bank account deposit. If you deposit into a Bank of America’s checking or savings account, you earn a 10% bonus on the amount redeemed. So effectively, the bonus tiers are 3.3%, 2.2%, and 1.1%.
- Minimum amount for redemption: $25
II. Card benefits:
Finding all information on this is tricky. Amusingly, Bank of America does not fully display the benefits on the official product page. They also do not explain the benefits that are displayed. Fortunately, the Benefit Information Center has all the information you need. To borrow the language from the Center:
1. Purchase Replacement – Purchase Replacement – Within the first ninety days of the date of purchase, Purchase Replacement will replace or repair eligible items of personal property purchased entirely with your eligible card up to a maximum of $500 per claim and $50,000 per year, in the event the item is lost, stolen, or damaged.
This is a very useful benefit – don’t forget about it. If your laptop is water damaged in the first 90 days it may be covered by your card’s insurance even if the manufacture denies warranty!
2. Purchase Guard – Purchase Guard will double the manufacturer’s original United States (U.S.) warranty period on personal items purchased in full with your eligible card that carry a warranty duration of less than 1 year and extend the manufacturer’s original U.S. warranty period for 1 additional year for Covered Purchases with a warranty duration of 1 to 3 years.
This means warranty extension for your laptop, TV, etc. Also very useful!
3. Auto Rental Collision Damage Waiver – When certain terms and conditions are met, the Auto Rental Collision Damage Waiver benefit provides at no additional charge reimbursement for damage due to collision or theft up to the actual cash value of most rental vehicles. In your country of residence, this benefit is supplemental to, and excess of, any valid and collectible insurance from any other source.
If you rent cars, you should read up on the coverage in advance. Notice that the coverage is supplemental to any other insurance coverage.
4. Emergency Travel Assistance – Provides emergency and travel assistance services to eligible card members 24 hours a day, seven days a week. Assistance services range from medical, travel, legal assistance, to embassy and consulate information, currency exchange rates and weather reports.
If you’re stuck on the road with a flat tire and no one to help, call the number on the back of card. They will provide assistance, 24/7!
5. Common Carrier Travel Accident Insurance – Common Carrier Travel Accident Insurance provides accidental death and dismemberment coverage protection while traveling on a common carrier, provided the entire fare is charged to your eligible card. Common Carrier Travel Accident Insurance provides coverage up to $100,000.
I don’t want to imagine this being helpful to me. But you get the point.
III. Interest rate and fees
APR: 20.24% variable
Annual fee: $39. After the first year the card will become unsecured at which point you can request the fee be removed.
Balance transfer fee: 3%
IV. Additional Benefits
ShopSafe: this function lets you create a virtual credit card account when shopping online, helping protect your real credit card number. You can set an expiration date for this account. If you shop on a suspicious website and feel nervous about giving away your credit card information, this is the way to go. You can read more about this on BofA’s website. This feature is quite unique to Bank of America.
Mobile Banking and Text Banking: access your account and perform most functions through your smartphone/cell phone. Every bank has these nowadays.
For an overview of BofA credit cards’ hidden benefits, check this out: https://hiepsfinance.com/2013/02/22/anatomy-of-a-credit-card-bank-of-america-cash-rewards/
In my opinion, the BankAmericard Cash Rewards secured credit card is one of the finest products that Bank of America offers. Reliably graduating within one year, offering flexible limits, and giving cash rewards, this gem is one of a kind. If you are looking to build credit, I highly recommend this card. Welcome to the credit world!
-Richard (Hiep Tran)