BofA Boosts Cash Back for New Cash Rewards Credit Cardholders

Rhea-AI Summary

Bank of America (BAC) announced enhanced cash back rewards for new credit cardholders starting June 1, 2025. New Customized Cash Rewards cardholders will earn 6% cash back (up from 3%) in their chosen category during the first year, with categories including gas, online shopping, dining, travel, drug stores, and home improvement. New Unlimited Cash Rewards cardholders will receive 2% cash back (up from 1.5%) on all purchases during the first year. Both cards offer a $200 welcome bonus after spending $1,000 in the first 90 days. The Customized Cash Rewards card maintains its 2% cash back at grocery stores and wholesale clubs, with a quarterly spending cap of $2,500 for combined choice category and grocery/wholesale purchases.

Positive

• Enhanced cash back rewards double the standard rates for the first year
• Attractive $200 welcome bonus with relatively low spending requirement ($1,000)
• Flexibility to change reward category monthly with Customized Cash Rewards card
• No expiration on rewards as long as accounts remain open

Negative

• Quarterly spending cap of $2,500 for 6% and 2% categories on Customized Cash Rewards card
• Enhanced rates only valid for first year, then revert to lower standard rates
• Enhanced rewards only available to new cardholders

Insights

Financial Services Analyst

BofA's enhanced credit card rewards strategy aims to boost customer acquisition and card spending, likely improving revenue despite higher reward costs.

Bank of America's new credit card rewards enhancement represents a strategic competitive move in the highly contested rewards credit card space. By doubling the cash back rates for the first year for new cardholders (from 3% to 6% on Customized Cash Rewards and from 1.5% to 2% on Unlimited Cash Rewards), the bank is implementing an aggressive customer acquisition strategy.

This promotion strategically balances short-term costs against long-term gain. While the enhanced rewards will increase the bank's reward expense ratio, the one-year limitation creates a calculated customer acquisition cost. The primary business objective is clearly to expand their credit card portfolio by attracting customers who might otherwise choose competitors offering similar or better reward structures.

The timing is particularly noteworthy as it comes when consumers are increasingly sensitive to value propositions amid persistent inflation concerns. The $200 welcome bonus with a relatively accessible $1,000 spending requirement further enhances customer acquisition potential while encouraging immediate card utilization.

From a revenue perspective, the bank is likely banking on three key income drivers: interchange fees from increased transaction volume, interest income from revolving balances after promotional periods end, and customer retention after the promotional rate expires. The effectiveness will hinge on whether customers remain after the promotional rate drops back to standard levels.

This represents an evolution of BAC's cross-selling strategy across its suite of approximately 69 million consumer and small business clients, leveraging their expansive retail banking footprint to increase credit card penetration and share of wallet.

Coming June 1, New Customized Cash Rewards Cardholders Will Earn 6% Cash Back and New Unlimited Cash Rewards Cardholders Will Earn 2% Cash Back on All Purchases for the First 12 Months

CHARLOTTE, N.C., May 16, 2025 /PRNewswire/ -- Bank of America today announced enhanced cash back rewards offerings for new cardholders of the Customized Cash Rewards credit card and Unlimited Cash Rewards credit card during their first year, delivering even greater value to clients.

Available nationwide as of June 1, clients who open a Customized Cash Rewards card will earn 6% cash back in the category of their choice (up from 3%) during the first year. Clients who open an Unlimited Cash Rewards card will earn 2% cash back (up from 1.5%) on all purchases during the first year, with no limit to the amount of cash back they can earn.

"We are committed to providing our clients with credit cards designed to help them make the most of their everyday spending – now with an extra boost to help navigate the year ahead," said Lora Monfared, Head of Consumer Card Products at Bank of America. "Whether they prefer to maximize rewards in a specific spending category or earn a flat rate on all purchases, our cash rewards cards provide value to stretch their dollars further."

Welcome Bonus
In addition to the enhanced cash back, clients opening a Customized Cash Rewards card or a Unlimited Cash Rewards card will also receive a $200 welcome bonus after spending $1,000 or more on purchases in the first 90 days after the card is opened.

Customized Cash Rewards Offer Details
New cardholders can take advantage of the following features:

• Double Cash Back in the First Year: Cardholders earn 6% cash back for the first year from account opening in the category of their choice: gas & EV charging stations; online shopping (including cable, internet, phone plans and streaming); dining; travel; drug stores; home improvement and furnishings, 2% at grocery stores and wholesale clubs, and 1% on all other purchases.   
• After the first-year bonus offer ends, cardholders will earn 3% cash back on purchases in their category of choice.
• Cardholders earn 6% and 2% cash back on the first $2,500 in combined purchases each quarter in the choice category, and at grocery stores and wholesale clubs, then earn unlimited 1% thereafter. After the 3% first-year bonus offer ends, cardholders will earn 3% and 2% cash back on these purchases up to the quarterly maximum – and cash rewards don't expire as long as the account remains open.
• The category of choice can be switched once per month.

Unlimited Cash Rewards Offer Details
New cardholders can take advantage of the following features:

• Unlimited 2% Cash Back in the First Year: Earn unlimited 2% cash back on all purchases for the first year from account opening.
• After the first-year bonus offer ends, cardholders will earn an unlimited 1.5% on all purchases.
• No limit on cash back earned and no expiration on rewards as long as the account remains open.

Bank of America

Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 69 million consumer and small business clients with approximately 3,700 retail financial centers, approximately 15,000 ATMs (automated teller machines) and award-winning digital banking with approximately 59 million verified digital users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business households through a suite of innovative, easy-to-use online products and services. The company serves clients through operations across the United States, its territories and more than 35 countries. Bank of America Corporation stock is listed on the New York Stock Exchange (NYSE: BAC).

For more Bank of America news, including dividend announcements and other important information, visit the Bank of America newsroom and register for news email alerts.

Reporters may contact:

Don Vecchiarello, Bank of America   
Phone: 1.980.387.4899
don.vecchiarello@bofa.com

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SOURCE Bank of America Corporation

FAQ

What are the new cash back rates for Bank of America credit cards in 2025?

Starting June 1, 2025, new Customized Cash Rewards cardholders will earn 6% cash back in their chosen category and new Unlimited Cash Rewards cardholders will earn 2% cash back on all purchases during their first year.

What is the welcome bonus for Bank of America's new cash rewards credit cards?

Both the Customized Cash Rewards and Unlimited Cash Rewards cards offer a $200 welcome bonus after spending $1,000 or more on purchases in the first 90 days.

What categories are eligible for 6% cash back with BAC Customized Cash Rewards?

The 6% categories include gas & EV charging stations, online shopping, dining, travel, drug stores, and home improvement and furnishings. Cardholders can switch categories once per month.

Is there a spending limit for the BAC Customized Cash Rewards 6% cash back?

Yes, the 6% and 2% cash back rates apply to the first $2,500 in combined quarterly purchases in the choice category and at grocery stores/wholesale clubs. After that, earnings drop to 1%.

How long do the enhanced BAC credit card rewards rates last?

The enhanced rates (6% for Customized Cash Rewards and 2% for Unlimited Cash Rewards) are valid for the first year only, then revert to standard rates of 3% and 1.5% respectively.