Bank of America Cash Rewards Review: Choose Your Own Bonus Category

The Bank of America® Cash Rewards credit card stands out among other cash-back cards as a great option, despite its complicated terms.

Unlike other cards, the $0-annual-fee card lets you choose your own 3% bonus category from a list of options and change that selection up to once a month. It's an especially good deal for those who can boost their rewards rates by keeping large balances with Bank of America® or Merrill.

The main downside: The card comes with bonus category spending caps, so it's not a good pick for big spenders.

Key features of the Bank of America® Cash Rewards credit card

Card type: Cash back.

Annual fee: $0.

Sign-up bonus: $200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.

Ongoing rewards:

While the Bank of America® Cash Rewards credit card offers potentially valuable rewards for those who spend modestly, its rewards structure is fairly involved.

• 3% back on a category of your choice (options listed below) and 2% back on grocery stores and wholesale clubs for the first $2,500 of combined bonus category/ grocery store/ wholesale club spending per quarter; after hitting that threshold, you’ll earn 1% back on these purchases.

• 1% back on all other purchases.

When selecting a 3% back bonus category, you can choose one of the following six options:

1. Gas.

2. Online shopping.

3. Dining.

4. Travel.

5. Drugstores.

6. Home improvement and furnishings.

You can change this category up to once a month. If you don't select a category, the default 3% cash-back category will be set to gas, according to the issuer. Your selected category will remain the same from month to month, unless you change it.

APR: 0% intro APR for 15 billing cycles on purchases and balance transfers, and then the ongoing APR of 13.99% - 23.99% Variable APR.

Other benefits:

• Cardholders who are eligible for the Bank of America® Preferred Rewards program can earn higher rewards rates.

With this card, there’s no minimum redemption requirement when doing a one-time redemption of cash rewards into your Bank of America® account or statement credit, but there’s still a $25 minimum redemption requirement for other redemption options. Cash back can be redeemed for statement credit, a check, a direct deposit into a Bank of America® checking or savings account, an eligible 529 account or a contribution to an eligible Merrill account. You can also opt to register for automatic redemption.

Before pouncing on this offer, pay close attention to the spending caps on the bonus categories. If you spend far more than $2,500 per quarter on this card's 3% and 2% categories, you might earn more rewards with a different card that doesn't impose such caps.

» MORE: Bank of America® credit cards mobile app review

Benefits of the Bank of America® Cash Rewards credit card

Ability to CHOOSE YOUR OWN 3% CATEGORY

There aren’t many rewards credit cards that allow you to choose your own bonus categories. And of those that exist, none of them lets you change your selection up to once a month, as the Bank of America® Cash Rewards credit card does. That makes the card valuable for cardholders who want choice — especially because the card defines its rewards categories quite generously.

Consider the online shopping category, for example. This category includes purchases made with the following retailers, among others:

• Amazon.com.

• Bestbuy.com.

• Groupon.com.

• Target.com.

• Apple.com.

• Macys.com.

• Walmart.com.

» MORE: NerdWallet's best credit cards for online shopping

The dining category is similarly wide-ranging. This bonus category isn't just limited to sit-down restaurants; it also includes other eating places, fast-food restaurants, bars, cocktail lounges, nightclubs, taverns and drinking places. That would include, for example, Starbucks, GrubHub and McDonald's, among many other merchants, the issuer confirms. Consider, too, the breadth of the card's home improvement category, which covers retailers from Ace Hardware to Williams-Sonoma, but also things like air conditioning repair, plumbers, landscapers, antique shops, florists and much more. It's one of NerdWallet's top credit cards for new homeowners.

Remember, though, you'll only earn bonus rewards on the first combined $2,500 in purchases on the card's 3% and 2% categories each quarter. After that, you'll earn only 1% on those purchases.

Loyalty bonuses

While the Bank of America® Cash Rewards credit card promises plenty of choices, its rewards rates are unremarkable compared with other no-annual-fee cards — that is, unless you qualify for the Bank of America® Preferred Rewards program.

Under this program, you can earn 25% to 75% more on your eligible Bank of America® credit card rewards, among other benefits. You can qualify for the Preferred Rewards program when your combined balances in Bank of America® or Merrill accounts surpass certain thresholds. For example, say you kept more than a combined $100,000 in Bank of America® and Merrill accounts, and qualified for the 75% rewards boost. Instead of the usual 3% cash back on the category of your choice, you'd effectively be earning 5.25% back on purchases in that category. That's more than you'd generally earn on other no-annual-fee cards.

Introductory 0% APR PEriod and no annual fee

With the Bank of America® Cash Rewards credit card, you can come out ahead on rewards no matter how little you spend. That's because the annual fee is $0. The card also comes with an introductory 0% APR offer: 0% intro APR for 15 billing cycles on purchases and balance transfers, and then the ongoing APR of 13.99% - 23.99% Variable APR. That gives you plenty of breathing room to pay down a large purchase.

Drawbacks and alternatives

Spending caps can limit earning power

The quarterly spending caps on the Bank of America® Cash Rewards credit card make it a less valuable choice for those who spend thousands of dollars each month. If this is you, a flat-rate rewards card that doesn't impose such restrictions could be a smarter choice.

Try the $0-annual-fee Citi® Double Cash Card – 18 month BT offer instead. It offers 2% cash back on all purchases: You’ll get 1% back when you make purchases, and another 1% back when you pay them off. That rewards rate alone is enough to put it in direct competition with rewards credit card heavyweights — even those that charge annual fees.

Without loyalty bonuses, Rewards rates are modest

The Bank of America® Cash Rewards credit card offers plenty of good bonus category choices, but if you don't qualify for the Preferred Rewards program, its rewards just go up to 3%, with spending caps.

For a card with customizable rewards that go a little higher, the U.S. Bank Cash+™ Visa Signature® Card could fit the bill. The $0-annual-fee card offers 5% cash back on your first $2,000 in combined eligible net purchases on two categories of your choice from a list, and 2% cash back on your choice of either gas stations, dining or grocery stores. While the 5% categories on this card are relatively narrow — including, for instance, fast food, cell phone providers, and TV, internet and streaming services, among others — and you can't change your choices as often, this card might prove more valuable if you happen to spend an outsize amount in one of these categories.

For more information on how these cards stack up with each other, see our roundup of best credit cards.

Should you get the Bank of America® Cash Rewards credit card?

The bonus-category spending caps on the Bank of America® Cash Rewards credit card can make it a less-valuable deal for those who spend thousands each month. But if you’re a frugal shopper and want to choose your own 3% cash-back bonus category — especially if you keep a lot of money with Bank of America® or Merrill — this card is an excellent pick.