Bank of America lowers cutoff in new rewards program

Bank of America announced a new rewards program Monday, its latest attempt to win more business from existing clients as lenders nationwide compete for the assets of affluent customers.

The Preferred Rewards program is part of CEO Brian Moynihan’s strategy to expand the bank’s relationship with its 8 million mass-affluent customers,  defined as those with $50,000 to $250,00 in assets, which Bank of America refers to as its “preferred banking” clients.

The new rewards program is open to clients with an average of at least $20,000 in Bank of America checking, savings or investment accounts. It will replace an older rewards program, Platinum Privileges, which requires clients to meet a higher threshold of at least $50,000 in assets to participate.

The bank said it is phasing out Platinum Privileges, which did not offer rewards for as many products as the new program will.

Preferred Rewards will apply to a variety of Bank of America products, and customers must have a Bank of America checking account to qualify. Rewards include points or cash back on credit cards, interest rate discounts on home equity loans or lines of credit and credits on loans for home purchases or finances.

The bank began testing the program in five states, including South Carolina, last year. It plans to roll out the program nationwide in phases throughout 2014, with a North Carolina launch set for around September.

The Charlotte-based bank says the new program is designed to reward clients for “everyday banking” activities.

“It’s rewarding (you) ... as you expand your relationship with us,” Aron Levine, head of preferred banking for Bank of America, said in an interview with the Observer.

“We’re putting (in) a broad umbrella program, which is unique in the industry. We’re really focused on what is your overall relationship with Bank of America.”

Greg McBride, chief financial analyst for Bankrate.com, said the new program come at a time of intense competition among banks for mass-affluent households. It also comes at a time when big banks are challenged to grow revenues amid hurdles such as low interest rates and higher costs from regulations.

“Achieving growth in that type of environment is a lot easier if you’re able to retain existing customers and grow the relationship you have with them, rather than pinning all your hopes on bringing in new customers,” he said. “Affluent and mass-affluent households are the candidates for multiple products and services that banks desire.”

Moynihan, talking about the bank’s consumer banking segment at a conference in December, described its preferred banking customers as “our strongest growth opportunity.”

The bank wants to “deepen” its relationship with those customers, who generate more revenue for the bank as they buy more products, Moynihan said.

Bank of America’s new rewards program comes on top of other steps the bank has taken in recent years to serve mass-affluent clients. Since 2012, the bank has been adding specialists in its branches to steer those customers to mortgage, investing and other products and services.

Nationwide, it now has 2,100 specialists in roughly 1,150 branches, according to the bank. There are 59 of the specialists in the Charlotte metro area.

Dean Athanasia, president of preferred and small-business banking for Bank of America, said the bank plans to grow to 2,500 specialists nationwide by the end of 2014. Some of those additional specialists will be put in the Charlotte area, he said.

“You would see more in some of your key areas: SouthPark, Ballantyne, Myers Park,” he said.