@wasCB14 wrote:
@Anonymous wrote:Anyone else feel like 2% and 1% categories (on a card that offers >2% on something else) are irrelevant to most? I feel like most people carry a card that gets them 2% CB on everything. Maybe that's not true and I just assume that since this is a CC forum. I know there are people out there that only carry 1 or 2 cards so those 1% or 2% categories may mean something to them, but I think for the majority of us we probably only see value in the main category for most cards that offer smaller CB on other categories. Thoughts anyone?
Keep in mind one person 2% category is another's 3% or 3.5% category.
^ This.
For one thing, many cards set up a tiered system that pays only 1% on the base level. A lot of people don't have 2% or 1.5% cards or they just want a simple wallet with one or two cards. They aren't like us. Lol ... so they actually use cards like that at 1% and 2% categories.
But what @wasCB14 is exactly right. With both Cash Rewards and Premium Rewards, Bank of America pays their Preferred Rewards clients a nice bonus. +25% for Gold ($20K in deposits), +50% for Platinum ($50K in deposits), and +75% for Platinum Honors ($100K in deposits). Bank of America makes rewarding relationship very straightforward and obvious.
I moved assets to Merrill Lynch to qualify for Platinum Honors recently, so I get ...
- Cash Rewards 3% category (3.00 x 1.75) = 5.25%
- Cash Rewards 2% category (2.00 x 1.75) = 3.50%
- Cash Rewards 1% category (which I don't use) would give me (1.00 x 1.75) = 1.75%
- Premium Rewards 2% on dining and travel (2.00 x 1.75) = 3.50%
- Premium Rewards 1.50% on everything else (1.50 x 1.75) = 2.625%
That 3.5% on warehouse clubs gives me 3.5% off at Costco, beating my Citi-Costco card's 2% and my AOD FCU Visa's card 3.00%. 
@Anonymous wrote:I get it when you're talking about the system that BoA has. That's more of the exception though and wasn't speaking specifically about them and moreso about cards in general that have 1% and 2% categories offered behind whatever the main 3%-5% or whatever category is.
I think the lender's intent is what I mentioned in the first part of my reply; that they hope to capture people who aren't as focused or savvy on finding the absolute best rewards deals and are satisfied with a card that pays at least one percent. Lenders know some people just want a simple wallet with only a few cards, so they're willing to compromise on rewards.
We are all outliers on My Fico. While the average number of credit cards per consumer is between about 2 and three, statistically I would bet that the number who have a card that pays 2% or higher in cash back, uncapped and uncategorized, is probably very small. I would guess the number is no more than about 20% to 25% of the consumers who have cards. Why? A lot don't know much about the subject or take time to research it. I can't tell you how many people I've chatted with about cards who are still using some that only pay 1.5% or less, and these people have good credit. Also, there's a lot of consumers in the bottom half of the credit ratings with subprime cards that may not pass underwriting for many of the 2% or better cards. While cards paying 1.5% are more common and a little easier to get, a lot of consumers are probably swayed by the 3% or 2% categories and may not take time to do the math to see how these cards compare to other options. Those 2% and 3% numbers look pretty jaw-dropping to them in context, and the 1% still seems acceptable to them.