Bank of America has raised the ante in the upper end of the consumer market by enhancing its rewards and loyalty program and rolling out a luxury metal card. Both are an effort to gain a greater foothold in the competitive high new worth and ultra-high net worth market, filling in gaps in the bank’s offerings.
The bank announced two new tiers for its already existing (and very successful) Preferred Rewards program: Diamond and Diamond Honors. The tiers are for those with $1 million and $10 million in assets with the bank, respectively. The existing minimum tier for the Preferred Rewards program – the Gold tier — is $20,000 in assets.
Diamond and Diamond Honors members will receive a range of benefits across an extensive roster of merchant discounts, offers and exclusive experiences, Bank of America says, including:
- 75% credit card rewards bonus on all eligible Bank of America credit cards.
- 20% interest rate booster on Bank of America Advantage Savings accounts.
- Reduced annual program fee with a Merrill Guided Investing account.
- Additional mortgage and home equity benefits.
In addition, exclusive luxury benefits and “lifestyle experiences” including customized and unique events from premium brands, the bank states are among the perks for Diamond level customers.
It’s Not all Bling and Bucks:
BofA’s Diamond tier customers also get access to personalized services from third party experts to help navigate such complex topics as college advice, career support and eldercare options.
“We’re doing this because there is a significant opportunity in this segment over $1 million that does not currently bank with us,” said John Sellers, rewards executive at Bank of America, in a conference call with reporters. “There is growing competition in this high-net-worth space. It also gives existing members a reason to do more business with us.”
Three Reasons for Expanding the Loyalty Program
Loyalty and rewards programs are an essential component in attracting and retaining customers in the competitive financial services landscape, Sellers added, and that there are three main drivers for creating a more robust rewards program.
“First, it makes them feel valued,” Sellers said. “Loyalty and rewards members have a higher customer satisfaction rating. Second, it leads to stickier relationships. This is especially important when it comes to clients with higher average assets. Third, rewards program members do more business with us. Our data shows that one out of three members buy a new product within 30 days of entering the rewards program.”
While these new tiers are meant to attract wealthy clientele, Sellers added that the Preferred Rewards program, in place since 2014 already had three reward tiers and now totals $1.9 trillion in assets.
Preferred Rewards program members “already enjoy bonus points on card spending, discounts on home lending, and fee waivers,” added Randy Takian, head of wealth management banking and lending at Bank of America. “The new Diamond and Diamond Honors tiers take the program to another level for our high net worth and ultra-high net worth clients.”
Luxury Cards Have a New Competitor
Bank of America also unveiled a new credit card product, the Premium Rewards Elite card. The metal card has a $550 annual fee and is designed with features meant to appeal to high net worth clients, said Jason Gaughan, credit card executive at Bank of America.
Some of these features include 2 points for every $1 spent on travel and dining purchases and 1.5 points for every $1 spent on all other purchases. There is no limit to
points earned, and points don’t expire, according to the bank.
Cash rewards cards are much more in favor currently but the BofA’s new card has that covered: Cardholders can choose to use the points for cash back; a statement credit or redeem them for travel, experiences or gift cards.
The card also offers access to a variety of exclusive lifestyle and travel benefits, including a complimentary 24/7 full-service concierge, what the bank terms “generous” credits for incidental airline charges and lifestyle conveniences, airfare discounts, special offers for luxury travel and more. There are also annual $300 incidental travel and $150 lifestyle credits.
BofA’s new Premium Rewards Elite card will compete with Chase Sapphire Reserve and other luxury cards, allowing points to be used to book a private jet.
“This is meant to compete with cards like the Amex Platinum and Gold and Chase Sapphire Reserve,” Gaughan said during the conference call. “We had a gap when it came to high net worth and ultra-high net worth prior to this card. We are confident we’ve closed that gap.”
Gaughan said in reference to the Sapphire card that Chase had “mass-marketed the product and offered enormous sign-on bonuses and things of that nature” and that the approach with the Premium Rewards Elite card would be different.
Next Up: Tailored Partner Rewards
Bank of America also plans to shortly launch another new program called Partner Rewards, available to both credit and debit cardholders, designed to provide greater choice in how clients redeem exclusive partner offers and rewards.
Once enrolled, cardholders will be able to select which Bank of America card they would like associated with the program, and whether they want to receive their existing credit card rewards or trade in their rewards for enhanced merchant benefits.
The first merchant partner, announced during the conference call, will be Shell. This will allow program members the option to receive discounts on gasoline purchases.
The bank will continue looking at more ways to bring more merchant partners on board across verticals “where clients have high velocity of everyday spend,” added Victoria Dravneek, head of personalization & loyalty strategy at the bank.