BofA Preferred Rewards

[GmbH]

OP, this is unrelated to your question, but in the grand scheme of things you are losing money in your savings account, inflation is eating away purchasing power of your dollars since savings rates are lower than inflation. Yes there is compunding of interest but you are still in red. Please move your money to any type of investment that will at the very least beat inflation and generate some return.

[kdm31091]

I think in general you shouldn't make important investment decisions because of minor boosts in credit card rewards. I also think your math is to some degree flawed. You may be maxing out the bonus spend on the Cash Rewards, but is that all spend you need to be doing? If you cut down just a little, the numbers would change. The best way to save is by not spending in the first place, regardless of a little bit of extra rewards.

It's also very easy to tell yourself "oh I'll invest the extra CC cash back" but it's also easy to end up not doing so.

Given the difference between the setups is ~$500 a year, which is not going to make any large difference to your life or goals, it's really up to you. I'd question whether it was worth the hassle for that amount of gain. Cutting out just $40 a month in unnecessary spending and adding that to your savings would get you the same result.

[imaximous]

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@VPExecutive wrote:

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@imaximous wrote:

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@credit_is_crack wrote:

That's what I came up with first, however I literally was testing the "what counts for online purchases" paying small amounts on one of my BofA cards and learned my rent triggered the 3% - which is epic!

Before learning this I was making $0 off of it. Now that I now it counts, I'll be paying it thru there which will produce the $600. The portal does charge a fee of .5% which comes out to about $9 a month). Even factoring that in, $108 in fees a year, I'll net about $640 a year (with the 25% bump) vs the $276 on the savings alone (and paying no fee on the rent). 

Am I looking at that right?

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Regardless, I still think you can make the $600 minus fees without moving the money. That's kinda the point I was trying to make.

If you pay rent with a 0.5% fee, you'll get $500 + $276 = $776

If you get a 25% bump, now your math looks like this, $20,000 x 3.25% (3.75% - 0.50% fee) = $650 a year, which is still less than leaving your $20k at the other bank.

Now, once you start moving up the Preferred Rewards program, things change. At Platinum, you already come out ahead by a small margin. If you're planning to get there at least, then it can make sense.

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Right, but how much could OP make by simply moving that money from a savings account to a stock like Coca Cola that yields 3% just in dividends through Merrill Lynch, plus thee boosted credit card rewards. 

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Definitely, but I made my calculations under the assumption that OP wasn't interested in an investment account for the $20k. He stated that he'd "park" the money knowing the savings rates are terrible at BofA. That money is currently sitting in a savings account and not a brokerage account, so he would've mentioned any intentions of opening a ME account for it. 

Maybe I'm wrong, but it looks like this money is reserved to have easy access to. He could very well have investment/retirement accounts elsewhere. Personally, I'm PH at BofA and have no investment accounts there. I use other banks for that.

[credit_is_crack]

Thanks for the valuable insight and corrections. You all are correct, I still come out ahead by leaving the money where it's at and maxing the $600 on the cards.

to be clear, I'm not generating spend on these cards, it would be paying rent. I only spend money on cards to net rewards for items that I was already going to pay out regardless.

I do have investments elsewhere and about $40k in liquid cash as someone mentioned, for easy access. these are my emergency funds so I can get into it quickly via checking and/or savings if needed (God willing I don't, but just in case). I do like the idea of investing it in ML as an investment option plus the rewards - it's not going to change my retirement date but it's nice to know ALL my money is working for me if i can do so. 

I was up really late doing math I should not have been LOL

[VPExecutive]

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@imaximous wrote:

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@VPExecutive wrote:

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@imaximous wrote:

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@credit_is_crack wrote:

That's what I came up with first, however I literally was testing the "what counts for online purchases" paying small amounts on one of my BofA cards and learned my rent triggered the 3% - which is epic!

Before learning this I was making $0 off of it. Now that I now it counts, I'll be paying it thru there which will produce the $600. The portal does charge a fee of .5% which comes out to about $9 a month). Even factoring that in, $108 in fees a year, I'll net about $640 a year (with the 25% bump) vs the $276 on the savings alone (and paying no fee on the rent). 

Am I looking at that right?

---

Regardless, I still think you can make the $600 minus fees without moving the money. That's kinda the point I was trying to make.

If you pay rent with a 0.5% fee, you'll get $500 + $276 = $776

If you get a 25% bump, now your math looks like this, $20,000 x 3.25% (3.75% - 0.50% fee) = $650 a year, which is still less than leaving your $20k at the other bank.

Now, once you start moving up the Preferred Rewards program, things change. At Platinum, you already come out ahead by a small margin. If you're planning to get there at least, then it can make sense.

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Right, but how much could OP make by simply moving that money from a savings account to a stock like Coca Cola that yields 3% just in dividends through Merrill Lynch, plus thee boosted credit card rewards. 

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Definitely, but I made my calculations under the assumption that OP wasn't interested in an investment account for the $20k. He stated that he'd "park" the money knowing the savings rates are terrible at BofA. That money is currently sitting in a savings account and not a brokerage account, so he would've mentioned any intentions of opening a ME account for it. 

Maybe I'm wrong, but it looks like this money is reserved to have easy access to. He could very well have investment/retirement accounts elsewhere. Personally, I'm PH at BofA and have no investment accounts there. I use other banks for that.

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OP, I might add that Merrill Lynch has a CMA with debit card and a check writing feature. One can always borrow against margin if they need fast cash and park the money in either a money market, stock, mutual fund, sweep, etc at the same time.

The funds in your CMA count towards the Preferred Rewards Program.  

[Anonymous]

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@VPExecutive wrote:

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@imaximous wrote:

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@credit_is_crack wrote:

That's what I came up with first, however I literally was testing the "what counts for online purchases" paying small amounts on one of my BofA cards and learned my rent triggered the 3% - which is epic!

Before learning this I was making $0 off of it. Now that I now it counts, I'll be paying it thru there which will produce the $600. The portal does charge a fee of .5% which comes out to about $9 a month). Even factoring that in, $108 in fees a year, I'll net about $640 a year (with the 25% bump) vs the $276 on the savings alone (and paying no fee on the rent). 

Am I looking at that right?

---

Regardless, I still think you can make the $600 minus fees without moving the money. That's kinda the point I was trying to make.

If you pay rent with a 0.5% fee, you'll get $500 + $276 = $776

If you get a 25% bump, now your math looks like this, $20,000 x 3.25% (3.75% - 0.50% fee) = $650 a year, which is still less than leaving your $20k at the other bank.

Now, once you start moving up the Preferred Rewards program, things change. At Platinum, you already come out ahead by a small margin. If you're planning to get there at least, then it can make sense.

---

Right, but how much could OP make by simply moving that money from a savings account to a stock like Coca Cola that yields 3% just in dividends through Merrill Lynch, plus thee boosted credit card rewards. 

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@VPExecutive wrote:

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Right, but how much could OP make by simply moving that money from a savings account to a stock like Coca Cola that yields 3% just in dividends through Merrill Lynch, plus thee boosted credit card rewards. 

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Yes, unless there is a time you need the money now (which might be why it is in a savings account).   So today's Coca Cola history

52-wk high	60.13
52-wk low	36.27

So if you bought at the high and needed it at the low, you are  seeing a 40% loss.    Not always a winning approach

[wasCB14]

Has anyone found a brokerage account with a good yield on cash...a place for cash to sit and be ready for investment? I have margin approval but don't want to use it.

Preferred Rewards PH works for me because I'm not about to sell certain investments. But if cash represented a significant share of my qualifying balances, I'd probably not bother.

[Anonymous]

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@wasCB14 wrote:

Has anyone found a brokerage account with a good yield on cash...a place for cash to sit and be ready for investment? I have margin approval but don't want to use it.

Preferred Rewards PH works for me because I'm not about to sell certain investments. But if cash represented a significant share of my qualifying balances, I'd probably not bother.

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Until fairly recently, I was happy with brokered IRA CDs in Fidelity, but for some reason they have become REALLY uncompetitive!   I think currently an 18month CD is about 0.2% whereas with Pen Air it is 1.55%   But then Pen Air isn't a brokerage!

[wasCB14]

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@Anonymous wrote:

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@wasCB14 wrote:

Has anyone found a brokerage account with a good yield on cash...a place for cash to sit and be ready for investment? I have margin approval but don't want to use it.

Preferred Rewards PH works for me because I'm not about to sell certain investments. But if cash represented a significant share of my qualifying balances, I'd probably not bother.

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Until fairly recently, I was happy with brokered IRA CDs in Fidelity, but for some reason they have become REALLY uncompetitive!   I think currently an 18month CD is about 0.2% whereas with Pen Air it is 1.55%   But then Pen Air isn't a brokerage!

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But if you wanted to use the cash to buy stocks, you'd presumably pay some penalty for early redemption or have to find a buyer on the secondary market. I'm looking for something more liquid.

[VPExecutive]

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@Anonymous wrote:

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@VPExecutive wrote:

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@imaximous wrote:

---

@credit_is_crack wrote:

That's what I came up with first, however I literally was testing the "what counts for online purchases" paying small amounts on one of my BofA cards and learned my rent triggered the 3% - which is epic!

Before learning this I was making $0 off of it. Now that I now it counts, I'll be paying it thru there which will produce the $600. The portal does charge a fee of .5% which comes out to about $9 a month). Even factoring that in, $108 in fees a year, I'll net about $640 a year (with the 25% bump) vs the $276 on the savings alone (and paying no fee on the rent). 

Am I looking at that right?

---

Regardless, I still think you can make the $600 minus fees without moving the money. That's kinda the point I was trying to make.

If you pay rent with a 0.5% fee, you'll get $500 + $276 = $776

If you get a 25% bump, now your math looks like this, $20,000 x 3.25% (3.75% - 0.50% fee) = $650 a year, which is still less than leaving your $20k at the other bank.

Now, once you start moving up the Preferred Rewards program, things change. At Platinum, you already come out ahead by a small margin. If you're planning to get there at least, then it can make sense.

---

Right, but how much could OP make by simply moving that money from a savings account to a stock like Coca Cola that yields 3% just in dividends through Merrill Lynch, plus thee boosted credit card rewards. 

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@VPExecutive wrote:

---

---

Right, but how much could OP make by simply moving that money from a savings account to a stock like Coca Cola that yields 3% just in dividends through Merrill Lynch, plus thee boosted credit card rewards. 

---

Yes, unless there is a time you need the money now (which might be why it is in a savings account).   So today's Coca Cola history

52-wk high	60.13
52-wk low	36.27

So if you bought at the high and needed it at the low, you are  seeing a 40% loss.    Not always a winning approach

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KO has been a winning approach since day one. A short-term drop isn't the reflection of the entire portfolio over years at a time.