Bank of America is rolling out a new credit card and beefing up its existing rewards program in a bid to encourage up to 1 million wealth clients to use its banking services as well, executives said Thursday.
Chief Executive Brian Moynihan has called the preferred rewards program a key pillar of the bank’s growth strategy. The new benefits aim to encourage clients of the bank’s Merrill Lynch and U.S. Trust wealth management businesses to open credit cards and checking accounts.
“We have 1 million wealth clients who don’t bank with us,” John Sellers, head of preferred rewards, said in an interview. “When they do, history tells us, they bring hundreds and thousands of dollars of incremental assets. The (new rewards offers are) a great carrot to hold out there.”
The program offers awards like cash back and discounts on home loans to customers who kept more than $20,000, $50,000 or $100,000 with the bank, with the benefits increasing based on assets.
Thursday’s announcement adds perks for people who keep more than $1 million or more than $10 million at the bank, and it adds a new credit card – the premium rewards credit card elite.
The strategy is to convince these customers the credit card rewards are so good that they will want to move more of their money and accounts to Bank of America, said Jason Gaughan, head of consumer card products.
“These customers don’t usually revolve a balance,” so the bank does not earn much interest from them, Gaughan said. “The value isn’t really the card relationship. It’s the entire relationship.”
Card holders who also qualify for the top rewards tiers can earn up to 3.5 points per $1 spent on travel and dining, as opposed to the 2 points per $1 for all other card holders.