How I Owned Bank of America Options

[Yatta]

I also posted this over at 3D Realms: http://forums.3drealms.com/vb/showthread.php?p=915873

Hi guys--I was shopping around for a credit card at Bank of America and I had a rather interesting chat with one of their online agents regarding the amount of money I would be able to save on one card versus the other.

The first few messages from the transcript are irrelevant, but if you skip to the bolded message and read on to the end, you will see how I was able to come to an interesting conclusion about the usefulness of one credit card over another.

The reason for my post is not to state the obvious regarding how banks or credit card companies are trying to maximize the way they can legally trick their customers, rather I am trying to show that there might be larger implications when it comes to different plans offered by banks, and how some plans simply benefit no one regardless of their individual circumstances.

This might be boring for people not interested in finance, accounting, or economics, so please do not bother reading the transcript if number calculations and credit cards aren't your thing!

Current Transcript of the Chat Session

Chat InformationThank you for choosing Bank of America. An operator will be with you shortly.

Chat InformationYou are now chatting with Lizzie.

Lizzie: Happy Sunday, how are you today?
You: Hi Lizzie. I'm trying to get more information on the Bank of America® World MasterCard® Credit Card with WorldPoints®.
You: I'm well, how are you?
Lizzie: Wonderful! What information are you looking for please ?
You: This card works in all countries of the world?
Lizzie: Correct.
You: Is there an additional fee for using the card outside of the U.S.?
Lizzie: There is a 3% fee.
You: Do you offer any cards without 3% fees for use outside of the U.S.?
Lizzie: The Amex is 1%,
You: That is the lowest?
Lizzie: Yes it is.
You: I do not see the Amex here: https://www4.bankofamerica.com/credit-cards...on?view_all=yes
Lizzie: Please click here to apply for the Accelerated Cash Rewards American Express credit card.
Lizzie: Please click here to apply for the Accelerated Rewards American Express credit card.
You: Oh, Amex = American Express.
Lizzie: Correct.
You: Okay, is BankAmericard® Power Rewards® Visa Signature® Card also 3% in terms of international fees?
Lizzie: Yes it is.
You: Okay, now this card earns triple points for the first six months. What happens afterwards?
Lizzie: It is 1% after the 6 months.
You: I see. Are there any cards that are still 3% after six months? Or any cards with better rewards?
Lizzie: There are not.
You: Okay, so what is the main difference between Cash Rewards Visa and Power Rewards Visa cards?
Lizzie: The cash reward card is cash back only the power reward card offers rewards like airline tickets, merchandise, gift certificates, and cash rebates.
You: There is ONLY cash rewards for the Cash Rewards card? No gift cards, miles, etc?
Lizzie: Correct.
You: But the Power Rewards card has cash rewards (in form of rebate checks) as well?
Lizzie: Correct.
You: So if the Power Rewards card has the features of the Cash Rewards card AND more features (ex. flyer miles + gift cards), why would anyone want to get the Cash Rewards card?
Lizzie: It depends on that person it is choices for everyone.
You: Right, but I am trying to understand what makes the Cash Rewards card unique.
You: What does the cash rewards card have that the power rewards card does not?
Lizzie: The cash card is based on percent and the power reward is points.
You: So... first six months: Power Rewards: 3 points per $1, Cash rewards: 3% per $1?
Lizzie: Correct.
You: Okay, 3% of $1 for cahs rewards is obviously 3 cents.
You: What is 3 points equal to, in terms of cash?
Lizzie: 2,500 points = $12.50
Lizzie: 5,000 points = $25.00 (as of Jan. 1, 2005)
Lizzie: 7,500 points = $37.50
Lizzie: 10,000 points = $80.00
Lizzie: 15,000 points = $120.00
Lizzie: 20,000 points = $160.00
Lizzie: 25,000 points = $250.00
Lizzie: 35,000 points = $350.00
Lizzie: 50,000 points = $500.00
You: This is for the first six months?
You: Never mind, it applies even afterwards. Sorry.
Lizzie: Correct,
You: Please give me a moment, I am trying to calculate something.
Lizzie: Sure.
You: So every 200 points = $1, at least for the first few rates (ex. 2500 points)
Lizzie: Correct.
You: I am trying to see if it would benefit me more to get the cash rewards card if I will be able to get a higher rate of cash return.
Lizzie: I understand.
You: With power rewards, I will get $1 for every 200 points... so for the first six months, that's $66 I have to spend for every $1 I will get.
You: Is that correct?
You: $66 x 3 points = 200 points = $1
Lizzie: Correct.
You: Now... for cash rewards card: $66 x .03 = $2
You: For the same $66, the rate for cash return for the cash rewards card is double. Are my calculations correct?
Lizzie: I do not have the calculations at this department however from what I have done it is close.
You: Thank you. Before I decide, can you please show me the rates for gift cards on the Power Rewards card?
You: Example: How many points = $100 at Best Buy
Lizzie: You will not know you can try the redemption link.
Lizzie: Please click here to view the rewards that can be redeemed for the BankAmericard Power Rewards Visa Card.
You: 12,000 = $100 Gift Card 25,000 = $250 off the cruise of your choice 10,000 = $100 shipboard credit on the cruise of your choice 15,000 = Two Tickets to attend Smucker's® Stars on Ice® 12,700 = Apple® 2GB iPod Shuffle®
You: That's what I got from the link you sent.
Lizzie: Oh okay,
You: One moment while I make another calculation, please.
Lizzie: Okay.
You: Power Rewards: So I need 12,000 points for $100 gift card, and each $1 = 3 points for the first six months. So I have to spend (12000 / 3 ) = $4000 to get $100 worth of gift card.
Lizzie: That is it.
You: If I spent $4000 with the cash rewards card, I would get 3% cash back, that's $120. And it's cash, so I would not be limited to using a gift card at a single store.
You: Is that correct?
Lizzie: Correct.
You: Do you see why it makes no sense to get a power rewards card?
You: I get better returns on the cash rewards card!
Lizzie: You are welcome to get the power reward card.
You: Right, but you saw my calculations and you verified them.
You: I am trying to see what the best deal is. Obviously, the amount of money I can save on the cash rewards card is higher. Do you agree?
Lizzie: I stated that it was close to mine however I do not do the calculations here.
You: I understand. I know you are trying to help and thank you for that. But please tell me, based on your calculations, would I be correct to assume that I would save more money using the cash rewards card than using the power rewards card, at least in terms of a $100 gift card versus $120 cash back?
Lizzie: You are welcome to say so.
You: I will take that as a "yes," granted that I understand you cannot speak against products offered by the company for which you are working for.
You: Thank you Lizzie. I think I am going to go with the cash rewards card.
Lizzie: My pleasure! I do strive to provide excellent assistance, I hope you were happy with our chat today- I appreciate you taking the time to talk with me today, please click the close button to exit the chat . Have a wonderful 2010!
Lizzie: Would you like that link?
You: Yes, your assistance was excellent indeed. Have a wonderful 2010 and thank you for your help! I have the link, but thank you!
You: Have a good night. :-)
Lizzie: Thank you
You: Bye!
Lizzie: Goodbye.

By the way, here are details on the two cards in question:

http://img13.imageshack.us/img13/8864/bofa.png
 bofa.png ( 242.1K ) Number of downloads: 13

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[Sangman]

Wow. That's one needlessly complex system.
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traB pu kciP

[SBG]

Wow. That's really good. No bank of America for me anyways here in Canada.

[AgentScotty]

Whoa, deja vu...

One of my newer Citibank cards has the cash-back feature, and I've gotten hundreds of $$$ out of them over the years, while paying them $0 in interest and $0 in annual fees. I fear the Obamarama may put the kibosh on the no-annual-fee part, though.

My oldest card from Citibank has a rewards program that I don't use, but the interest rate is lower, the credit line is higher, and back when cars were cheaper, I could've charged a car on it. I save that card for any 4-figure-or-higher purchases I may need to make.

btw, you rule for cutting through the bullshit, but you suxx0r for not finding out if Lizzie is hot or not...

[ryche]

I won't ever go with Bank of America. I set up an account while in Basic Military Training for my military pay to be deposited into. On the forms it has areas for me to fill out for my wife to have access to the account. Low and behold when the paperwork goes through, Bank of America won't allow her access to the funds. She couldn't touch anything to help pay our bills or rent. It was so damn frustrating that when I was able to, I swapped banks and never looked back. Since I was in Basic, communication out was very limited so I couldn't just call up Bank of America and curse at them for ignoring that I had her on there.
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?machines have no conscience?

[DeeperThought]

One of my newer Citibank cards has the cash-back feature, and I've gotten hundreds of $$$ out of them over the years, while paying them $0 in interest and $0 in annual fees. I fear the Obamarama may put the kibosh on the no-annual-fee part, though.

Same here, but Discover Card in my case.

@Yatta: Nice post, but you should know that their employees cannot come out and say that one card is better than another.
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[VinsaneOne]

Same here, but Discover Card in my case.

@Yatta: Nice post, but you should know that their employees cannot come out and say that one card is better than another.

You: I will take that as a "yes," granted that I understand you cannot speak against products offered by the company for which you are working for.


I think he knows.
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[ryche]

http://www.tampabay.com/news/business/real...ash-for/1072632


This is just messed up.
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This post has been edited by ryche: Feb 13 2010, 02:08 PM

[SBG]

http://www.tampabay.com/news/business/real...ash-for/1072632


This is just messed up.

Man that's really fucked up.