Linking Bank of America credit cards with deposit accounts: Is it worth it?

Dear Cashing In,

I have had a Bank of America checking account for the last 10 years. I was looking at credit cards the other day and saw that Bank of America has some cards that give me benefits with my checking account.

Is it worth it to get a Bank of America credit card for this? – Robert

Dear Robert,

One of the business strategies banks have traditionally pursued is a tactic known as “cross-selling.”

The idea is that banks have developed financial relationships with consumers in one particular area – such as mortgages – and can use that list of customers to start selling them additional financial products, such as car loans.

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See related: Guide to the Bank of America Cash Rewards Credit Card

Banks are stepping up cross-promotion efforts

The same is true with credit cards. Bank of America is one of the few banks to try to incentivize you to open a bank account if you have one of its credit cards – or to apply for a credit card if you already have one of its bank accounts.

The bank figures it will make money off you for each one, so why not rebate some of its profit to you in the form of rewards to induce you to switch?

We also see this happen with some of the most elite credit cards.

For example, the JPMorgan Chase Palladium Visa is an invitation-only card that is available to customers who have a lot of money invested in the bank’s wealth-management brokerage.

Same with the Citi Chairman card, available only to certain customers of Citibank’s brokerage unit. Those are examples at the high end of bank commingling their credit cards with other financial activities.

But more might be on the way. Bloomberg reported in May 2019 that Citi will be expanding perks designed for credit cards to encourage sales of other banking products, including its ThankYou and Double Cash reward programs.

Evaluating a ‘cross-selling’ promotion

As usual, when evaluating these kinds of offers, you need to conduct a thorough assessment to see if what you’re receiving meets your needs.

If you are happy with your bank, the additional incentives might be too meager to switch and the hassles too great. Then again, 30,000 airline points to open a checking account can be compelling.

In the case of Bank of America, it has a program called Preferred Rewards, which gives perks based on the amount you have in Bank of America deposit accounts and Merrill Lynch investment accounts. (Bank of America owns Merrill Lynch.)

The rewards start kicking in for customers with $20,000 or more in deposits and investments.

The perks include:

• A small bump in the interest rate on savings accounts.
• A 25 percent credit card rewards bonus.
• A $200 break on origination fees for new mortgages and refinances.
• A small interest rate discount on home-equity lines and car loans.

You can see that most of the financial advantages have nothing to do with credit cards – only the reward increase.

So, by itself, it probably doesn’t make sense to get a Bank of America credit card just to receive a 25 percent reward boost. And it definitely doesn’t make sense if you don’t have the $20,000 to qualify for Preferred Rewards.

There might be other reasons to apply for a Bank of America credit card. But the mere act of linking it to your Bank of America deposit accounts probably doesn’t justify a new application by itself.