Archives for September 2017

Scott’s Pizza Tours: Unconventional Entrepreneur Turns Passion into Business

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

sptmovieI’m a sucker for people turning their unique interests into a profitable small business, especially a quirky one-person business (like this person who farms food from other people’s yards). My newest discovery came from watching the Scott’s Pizza Tours documentary about Scott Wiener, who turned his passion for pizza into a successful tour business and more. Below is a more bio and the trailer (direct link):

He runs a successful tour business in NYC, where he leads visitors to some of the best and most historic pizzerias in the world, teaching the history and science of pizza making. He writes a monthly column in Pizza Today magazine, is a legend in the pizza industry, judges pizza competitions, eats 15 slices per week, and–oh, yeah–he’s the Guinness World Record holder for the largest collection of pizza boxes, now numbering nearly 1,000 different boxes from 55 countries, selections of which are currently touring through gallery spaces in the U.S. and Europe, with tentative exhibitions planned for Asia and Latin America. In his spare time, he founded and organizes Slice Out Hunger, an annual event, which has raised over $70,000 for hunger relief organizations in NYC.

Are you happy with the path are you on? In one scene, Scott describes how he used to have a desk job with the government. After his first year, they had a little celebration and said “Hurray, only 24 years left until retirement!”. That statement really shook him, and he put in his resignation notice the next day.

“Follow Your Passion”: Too idealistic… or actually practical advice? You can’t make good money at something unless you’re good at it, and it’s very hard to get good at something if you don’t like it. That means passion fuels 2 out 3 parts of the pie (pun intended). If you can figure out how to make it well-compensated, you’re golden. Here’s a quote from Charlie Munger:

I have never succeeded very much in anything in which I was not very interested. If you can’t somehow find yourself very interested in something, I don’t think you’ll succeed very much, even if you’re fairly smart. I think that having this deep interest in something is part of the game. If your only interest is Chinese calligraphy I think that’s what you’re going to have to do. I don’t see how you can succeed in astrophysics if you’re only interested in calligraphy.

Dream job: Goal vs. Journey. Did Scott Wiener write down one day that his dream job would be to teach tourists about pizza history? No, it was a result of incremental daily movements. I’m reminded of the High Fidelity movie scene where John Cusack’s character makes a list of his top 5 dream jobs if “qualifications, history, time, and salary were no object.” After going through them, he realizes that he is already doing one of his dream jobs, owning his own record store.

I saw Scott’s Pizza Tours on the Viceland cable TV channel, but you might also be able to see it for free on Hoopla if supported by your local library. Otherwise, you can buy/rent on Amazon/iTunes/YouTube.

p.s. If you live in the NYC area, the 2017 edition of Slice Out Hunger’s $1 Pizza Party is on Wednesday, October 4, 2017. I’m impressed he even leverages his passion to raise money for a good cause (over $70,000 so far).

Practical Advice on Identity Theft and Removing Unauthorized Accounts

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

bankshowerThe boilerplate advice I keep reading at the end of every article about the Equifax hack is… Everybody freeze their credit! That certainly is an option, but perhaps it might be overkill to expect 150 million people to do that? The credit reporting agencies seem to make it an painful experience on purpose, charging you $10 a pop x 3 bureaus for freezing/thawing. Some good news: Equifax just announced a new free instant lock/unlock feature, which probably wouldn’t have happened if it wasn’t for this breach.

For a more practical perspective, I recommend bookmarking the post Identity Theft, Credit Reports, and You by Patrick McKenzie. He has real-world experience in helping others deal with the credit bureaus and navigating the Fair Credit Reporting Act (FCRA). My notes:

  • You don’t need to do anything just because your data was leaked or might have been leaked and nothing has actually happened.
  • Don’t pay money for credit monitoring.
  • If you find unauthorized charges on an credit card you opened yourself, just call your bank or card issuer. This shouldn’t be a big headache.
  • If you find an account NOT opened by yourself, either due to fraud or some sort of clerical error, then read the entire post for detailed instructions. You need to create a paper trail because this could easily turn into a big headache.

A lot of nuance is covered and sample text is helpfully included, such as:

On August 5th, 20XX I accessed my credit report from Experian, numbered 1234567. It shows an account with your institution in my name, with account number XXX123. I am unaware of the full account number. I have no knowledge of this account. I did not open it or authorize anyone to open it.

Please correct this tradeline and confirm this to me in writing within the timeframe specified by law. If you cannot correct this tradeline, provide me with your written justification for why your investigation concluded that this tradeline was accurate.

Here are some important things to note if you have to deal directly with a financial institution regarding an unauthorized account:

  • Do not call. Communicate only via written letters sent by postal mail to their official address. Create a paper trail. Keep a scan/copy of everything.
  • Never pay debt which isn’t yours, even if you are being harassed.
  • Never speak to debt collectors on the phone, either. Just ask for their address and hang up so you can communicate in writing. You are not breaking any laws if you hang up on them.
  • You can do this. In his experience, most issues were resolved after 2-3 letters send via certified mail/return receipt.

Tomorrow App: Free Will & Trust, Optional Term Life Insurance

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

tmrwapp0The newly-launched Tomorrow app brings estate planning to your smartphone. The app includes software that will guide you through the creation of a legal will and trust for your family, and it makes money by also selling term life insurance (which you can use to fund your trust). You can use the free will and trust feature on its own and buy life insurance elsewhere. More press at TechCrunch.

The ready-to-sign wills are legal in 47 states (AK, LA, NC coming later). Here’s a diagram from their website:

tmrwapp

Is this an adequate replacement for an estate lawyer? Estate planning is strange because it is so important, but people always procrastinate about it. Nobody wants to think about death. Meeting a lawyer can be intimidating and potentially expensive. So while you could argue about what is best, most people have nothing. Is it a positive to have free will & trust software that fits many situations, making it more readily available for the public? Can it provide a positive start to a conversation with family? I think so. Are there cases where an estate lawyer would create a better product customized to your personal situation? Certainly.

Here’s what The Consumerist (owned by Consumer Reports) had to say about other DIY will-making software back in 2011:

Our wallet-watching cousins at the Consumer Reports Money Adviser newsletter took a look at three DIY options for will-making — LegalZoom, Rocket Lawyer and Quicken WillMaker Plus — and found that while all three are better than not having a will, none of them is likely to meet the needs of anything more than the most basic of estates.

I’ve always been a little disappointed with legal software products when they say “we are not a law firm and this is not legal advice”. Okay, they probably have to say that. But really, if they are explicitly providing you with a ready-to-sign will and trust (and historically charging a fee for this service), then aren’t they… kinda… providing you legal advice? I certainly don’t understand it all on my own.

I did download the app and poke around for a bit. I liked the mobile-friendly Q&A format (similar to tax prep software), but as I’m not a lawyer I don’t know about quality or whether it covers the proper scenarios.

Competition. There are many established legal software websites that will guide you through the creation of a will and trust for a fee. For example, the LegalZoom Living Trust package includes a living trust, will, financial power of attorney, advanced medial directive, free revisions, and review from an independent attorney for $299. Willing.com currently offers a basic will for free (no minor children), but their cheapest package that includes a revocable trust also runs $299. A traditional local lawyer will certainly cost more than that, closer to $1,000 and up.

It appears that Tomorrow hopes to subsidize this cost by encouraging you to buy optional term life insurance from them. I think this is a reasonable idea (assuming its not too hard of a sell) as term life insurance is also one of those things people regret not buying until it’s too late. Comparison sites like PolicyGenius life insurance quotes are helpful because premiums are the same no matter which broker or website you buy it from. That means Tomorrow can’t mark up the price.

Our family already has a will & trust set up in-person with traditional lawyers. We bought term life insurance years earlier. On the other hand, I did use a software service to form my business (S-Corporation vs. LLC). Motivating myself to finish our estate plan was hard but I’m definitely glad we did it. I recommend getting something down in writing and starting the conversation, no matter which way you choose to do it.

Vanguard Thoughts: Pros and Cons from a 15-Year Client-Owner

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

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Vanguard has been sucking up assets like a vacuum, with total assets now exceeding $4 trillion. Their hybrid robo-advisor Vanguard Personal Advisor Services has over $65 billion in assets under management. Are they unbeatable? People tend to love building things up, then love tearing it down.

Vanguard holds the majority of my net worth, grown over 15 years in Vanguard brokerage accounts and Vanguard mutual funds/ETFs. You could therefore call me a fanboy, but also a concerned “client-owner” (I prefer the term “investor-owner”). As they keep hounding me to vote on their proxy, here’s what I like the most and least about Vanguard:

Pros

  • Historical track record. Vanguard has a long history of providing investments at a low cost. When they arrive to an asset class, costs tend to drop like a rock. This the Vanguard Effect.
  • Skill and experience. They are good at what they do – run low-cost index funds and low-cost actively-managed funds. They understand things like reducing index tracking error and utilizing securities lending to boost fund returns.
  • Ownership structure. Vanguard does have a unique ownership structure conducive to continuing to maintaining low costs. There are no outside shareholders or activist hedge funds working to squeeze out every last drop of profit.
  • Profitable. Vanguard has their current expense ratios and is actually making money (or technically breaking even) on every single fund and ETF. The others are losing money on their “cheap” products while they try to make money elsewhere.
  • Less company risk. All the above adds up to my opinion that Vanguard has the best chance of future, ongoing lower costs. A potential cost beyond expense ratios that should be considered is the cost of switching to a different fund in a taxable account. If I sell now to buy something else, I will have to pay taxes on a significant amount of capital gains. I want to minimize the chance of having to do that.

Cons

  • Lack of transparency on marketing costs. Vanguard runs a lot more advertising than they used to. I might argue too much, but nobody knows how much they are spending because they don’t disclose this even to their “investor-owners”. Vanguard is not a non-profit, but I have seen even non-profits suffer from internal bloat and having quality suffer in the pursuit of growth.
  • Lack of transparency on executive compensation. Vanguard may not have outside shareholders, but we also don’t know how much money the CEO or other executives make. If Vanguard were a publicly-traded company like Schwab, they would have to disclose these numbers. As “investor-owners”, I don’t get told anything. As this Bloomberg article states, “Vanguard is an important shareholder voice on executive pay, but it isn’t transparent on its own compensation.”
  • Mediocre customer service. Vanguard has struggled with the quality and responsiveness of their customer service as they have grown in size. My interactions with Fidelity and Schwab have consistently produced faster response times and more accurate levels of service. Vanguard themselves have admitted that they have had struggles in this area.
  • Not necessarily the cheapest at any given moment. If you look at any specific ETF benchmark at any specific moment in time these days, the cheapest offering might come from Vanguard, but it just as likely might come from Schwab, iShares, or Fidelity.

Financial author Jonathan Clements argues in his Protection Money article that he is willing to a little bit more for Vanguard ETFs in order to avoid potentially having to pay significant capital gains if the loss-leader pricing trend stops. I think that is a very valid argument.

Now, you could also buy Vanguard ETFs inside another brokerage account. However, you may have to contend with trade commissions. A few exceptions on ETFs: Merrill Edge and Bank of America will give you 30 free trades a month if you have $50,000 in combined assets at BofA and Merrill ( better credit card rewards). The Robinhood app lets anyone invest with free commissions (although I’d expect even less than Vanguard in terms of customer service). You can transfer Vanguard ETFs to another custodian for a flat fee if you wish to avoid realized capital gains.

Big picture. Vanguard changed the investment world, but now the gap is much narrower. I started out with Vanguard and think they still have the best long-term structure, so I own Vanguard mutual funds and ETFs. However, Schwab and iShares Core ETFs held somewhere with low trading costs and good customer service are also very good choices for someone starting out. This group of “nearly as good” alternatives to Vanguard continues to grow. Meanwhile, there is still another large group of “definitely worse” alternatives. Debating between 0.01% is rather useless when there are still people paying 1% or more for index funds.

SlingTV: Buy 2 Months, Get Free Indoor HD OTA Antenna

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

winegardSling TV streams live cable channels over the internet, with bundles starting at $20 per month. They have added some new promotions to help you add local HD broadcast channels via an OTA Antenna and a AirTV streaming box which integrates everything together to feel like a traditional cable box. No switching inputs back and forth.

  • Free Winegard FlatWave Indoor Amplified Antenna when you prepay two months of Sling TV. For as little as $40, you’d get 2 months of Sling TV and an antenna that costs $53 on Amazon.
  • Winegard Flatwave Indoor Amplified Antenna and AirTV Bundle for $70 when you prepay three months of Sling TV. The AirTV bundle costs $130 direct, but comes with $50 in Sling credit.
  • AirTV Bundle (Box + Adapter) for $50 when you prepay three months of Sling TV.

I hadn’t heard of the AirTV box before ( Wired review), but it strikes me as a time machine product. You can get live cable TV and old-fashioned channel surfing for about $20 to $30 a month. Both the product and price point feel like 1995. Sling TV has added cloud DVR recording on selected channels (no Disney/ABC/ESPN) for an extra $5 a month.

Alternatively, there is a product called Tablo that is a DVR with software designed to record OTA channels. Both AirTV and Tablo offer easy OTA channel lookup tools to see what is available in your area.

Amazon Prime Restaurants: $10 off $20 Minimum Order

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

az_restAmazon Restaurants is a restaurant delivery service open to Prime members. Enter your ZIP code too see if what restaurants are available in your area. They claim to deliver in an hour in most cases. Alexa skill available. What a world we live in.

Get $10 off your first order of $20+ with promo codes 10EATNOW or AMAZON10. With a $20 minimum order, the delivery fee is usually $4.99. Right now, delivery is free for $40+ orders. Tipping is optional but be aware there is a default value set during checkout.

Fandango Movie Tickets: Buy 1 Get 1 Free (3D/IMAX) – Sold Out

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(Update: Sold out.)

Fandango has been offering the equivalent of Buy 1 Get 1 Free movie tickets on weekends when you use Visa Checkout and promo code DEALSTHATCLICK9. Limited quantities, otherwise runs from 9/22 to 9/24/17. Technically, you have to buy 2 tickets and one of them will be free. Up to $25 value so 3D/IMAX/etc should work, and the convenience fee is also waived for one ticket. Perhaps in response to pressure from MoviePass, which doesn’t include 3D/IMAX?

fan_b1g1

Local Ethnic Grocery Stores: Why Are Fruits and Veggies So Cheap?

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

Bittermelon picture.  Source: https://commons.wikimedia.org/wiki/File:Bittermelon_(5926208390).jpgMost cities have local ethnic food stores that sell produce for a lot less than the big grocery chains. I suppose they are called this because they are often started by immigrants to serve other immigrants (ex. Mexican, Vietnamese, Armenian). But why are they cheaper? One popular theory was that they bought the “ugly” stuff that the chains wouldn’t buy. (Driscoll’s became dominant by breeding beautiful strawberries, even though in my opinion it tastes like they crossbred with styrofoam.)

In the case of New York City Chinatown at least, the WSJ found (non-paywall link) that a major reason behind the lower prices are special, local supply chains.

Her discovery: Chinatown’s 80- produce markets are cheap because they are connected to a web of small farms and wholesalers that operate independently of the network supplying most mainstream supermarkets.

My personal theory is that these are family businesses and everyone pitches in. The article doesn’t directly address cheap family labor, but minimal overhead is discussed:

Indeed, Chinatown’s green grocers make Costco look like Dean & DeLuca. Some are mere sidewalk stands renting space in front of a nail salon or a drugstore. Shelves are typically made of plywood and lined with newsprint; prices are hastily marked on strips of cardboard. Shoeboxes serve as cash registers. The scales are still analogue, and good luck using a credit card.

All this translates into low overhead for the retailers—and low prices for shoppers. The typical Chinatown produce markup is just 10% to 12% over wholesale, said Wellington Chen, executive director of the Chinatown Partnership Local Development Corp.

This special sourcing can vary. Unfortunately I don’t live near NYC Chinatown, but in my local ethnic market, some of the produce will also be from a local farm, often the lesser-known asian vegetable or herbs that grow like weeds but wilt quickly. However, some of these vendors also offer everything from watermelon to tomatoes in December. In that case, then they are probably buying some things directly from a commercial wholesaler. (It still might be cheaper than a chain.) I usually look for a sign that says “local” or simply ask them what is locally grown.

Health Insurance Premiums: Average Annual Cost $19,000 Family, $6,000 Individual

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

healthThe Wall Street Journal recently published (paywall?) a chart showing how the average cost of employer-provided health coverage for a family has changed from 1999-2017. The total average annual cost was $18,764 for a family and $6,690 for an individual in 2017. The data source is an annual poll of employers performed by the nonprofit Kaiser Family Foundation along with the Health Research & Educational Trust, a nonprofit affiliated with the American Hospital Association.

wsj_health

In very rough terms: a single adult is ~$500 per month ($6,000 per year), and a family is about $20,000 a year. These numbers agree overall with the preliminary health insurance quotes that I have gotten for my own family.

In addition to the rising premiums, the average annual deductible is now over $1,200 for a single worker.

The implications for an prospective early retirees are obvious. How are you going to cover this huge expense? Here’s a quick brainstorm of options. Spoiler alert: There is no easy fix.

  1. Use an Affordable Care Act (ACA) plan and get a subsidy if your income is low enough to qualify. Do a lot of reading, then hope it doesn’t change?
  2. Plan ahead with a job that offers health insurance benefits in early retirement (don’t have to be a certain age). You’ll probably have to hunker down with the same employer for a number of years.
  3. Save enough money (or create enough income) to pay for health insurance premiums. Try a managed-care system like Kaiser for a low-cost HMO plan.
  4. Find a part-time job that you both enjoy and offers health benefits.
  5. Run a part-time side business that earns enough profit to cover health insurance costs. Look for potential group discounts or tax breaks that are available as a business instead of a consumer.
  6. Now and later, look for a high-deductible health plan (HDHP) and fund a Health Savings Account (HSA) due to the tax advantages.
  7. Join a direct primary care arrangement or health care sharing ministry that is exempt from ACA.
  8. Extend your current employer coverage for up to 18 months through COBRA (check cost).
  9. Move to a foreign country with reasonable and transparent cash pricing.

Am I missing anything? Right now, we have #4. My family’s future plan is a mix of #1, 3, and 5. However, #5 could push us over the income limits for #1.

Museum Day: Free Tickets Nationwide On Saturday, September 23, 2017

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

museum_day_generic

This upcoming Saturday! Museum Day Live! is an annual event hosted by Smithsonian magazine in which participating museums across the country open their doors to anyone presenting a Museum Day Ticket for free. This is in following the spirit of Smithsonian Museums, which offer free admission every day.

Registration is now open for Saturday, September 23, 2017. Find participating museums here. Request your ticket here. One ticket per valid email address. Each ticket provides general admission for ticketholder one guest. You must pick the specific museum during the ticket request process, and then download a PDF to print out as your ticket.

There are some cool museums around us that now cost $25 for adults and $10 for children, so this can be a significant savings depending on the size of your family. (Two adults can register, and that would allow four total people. Kids can also get their own tickets in case you bring along more people.)

Don’t forget to add the event to your calendar! I’ve probably forgotten about this half the times that I’ve registered.

Also see: Bank of America’s Museums on Us Program.

Robinhood: Free Share of Stock for New Users – Estimated Value

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

rh_freestock

Robinhood is a sleek smartphone app that’s a brokerage account with unlimited $0 trades with no minimum balance requirement. They’ve been around for a few years now and I’ve been impressed that they’ve kept up the free trade business model, partially by recently rolling out premium paid features. I enjoy the minimalist and intuitive interface.

Right now, if you a referred by an existing user you get a free share of stock. The existing user also gets a free share, so thanks if you use it! As I write this, that share is randomly selected from a pool of “widely-held companies”, which includes Apple ($158), Facebook ($172), or Microsoft ($75). Too bad they don’t offer Berkshire Hathaway Class A shares ($274,000). Okay, but there are also shares of companies that are worth $1 or less.

What share value should I expect? Here are screenshots from my phone showing some odds:

rh_freestock3 rh_freestock2

For some reason they try to use the World’s Smallest Fine Print™, but here are selected details from their FAQ:

The stock bonus is one share selected randomly, when the bonus criteria are met, from Robinhood’s inventory of settled shares held for this program. When shares are purchased into this inventory, Robinhood purchases shares from the three to four companies representing the highest market capitalization in various ranges of share prices between approximately $3 and $175, limited to those companies that are widely held among Robinhood accounts. There is an approximately 98% chance of the stock bonus having a value of $2.50-$10, an approximately 1% chance of the stock bonus having a value of $10-$50, and an approximately 1% chance of the stock bonus having a value of $50-$200, based on the price of shares at the time of purchase. The Robinhood platform displays approximate odds of receiving shares from particular companies at the time the screen is generated. These odds do not necessarily reflect the odds of receiving stock in those companies at the time the stock bonus is awarded.

So… basically 98% chance of getting something $10 or less, and 2% chance of something higher. This means the weighted average share price can’t be more than ten bucks.

By the way, you can cash out your bonus by selling after 2 days and withdrawing your balance after 30 days:

Limit one offer per qualified referral with a maximum of one account per referred client. Stock bonus will be credited to the enrolled account within approximately one week after the bonus is claimed. Stock bonuses that are not claimed within 60 days may expire. Shares from stock bonuses cannot be sold until 2 trading days after the bonus is granted. The cash value of the stock bonus may not be withdrawn for 30 days after the bonus is claimed.

Bottom line. The Robinhood “Get Free Stock” promotion is clever and it certainly appeals to the hopeful gambler within us with a $200 potential value, but most people are likely going get a share of stock valued at $10 or less. (Don’t sell it and wait 30 years – see what happens!) I would just treat as a fun game if you otherwise want to be able to trade stocks for free on your smartphone. Robinhood is a good value on its own, see my full Robinhood review.

Sign up for Robinhood and get your free share here, and I’ll report back on any shares that I win.

Bank of America Premium Rewards Card Review – 50,000 Bonus Points

“The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone.”

bofa_premium225After some sneak peaks and rumors, the Bank of America® Premium Rewards® Credit Card is now officially live. This card is a new addition to Bank of America’s rewards card line-up, and the question will be if the added benefits outweigh the $95 annual fee. This card also participates in the Preferred Rewards program, which gives you better rewards if you give BofA more of your business. Here are the highlights:

  • 50,000 point sign-up bonus ($500 value) after making $3,000 in purchases in first 90 days of account opening.
  • Earn 2 points per dollar spent on travel and dining purchases.
  • Earn 1.5 points for each dollar spent on all other purchases.
  • Reward points can increase by 25 to 75 percent on each purchase for clients enrolled in the bank’s Preferred Rewards program.
  • Up to $100 annual airline incidental statement credit for qualifying travel purchases such as seat upgrades, baggage fees, in-flight services and airport lounge fees.
  • Up to $100 airport security statement credit towards TSA-Precheck or Global Entry Application fee, every four years.
  • No foreign transaction fees.
  • $95 annual fee.
  • No limit to earning points, and points don’t expire.

Tips on qualifying for Preferred Rewards. The Preferred Rewards program is designed to rewards clients with multiple accounts and higher assets located at Bank of America banking, Merrill Edge® online brokerage, and Merrill Lynch® investment accounts. Here is a partial table taken from their comparison chart (click to enlarge):

bofa_pref1

Bank of America’s interest rates on cash accounts tend to be much lower than highest-available outside banks, so moving cash over to qualify may reduce your interest earnings. Pass. Merrill Lynch advisory accounts also usually come with management fees. Pass. However, if you have brokerage assets like mutual funds and ETFs, moving them over to Merrill Edge may actually reduce your costs because at the Platinum and Platinum Plus levels they will actually give you 30 to 100 free online stock trades every month.

A couple years ago, I did a partial transfer of a little over $100k of brokerage assets (Vanguard funds) over to Merrill Edge to qualify for Platinum Honors. (You could also do $20k to qualify for Gold, or $50k to qualify for Platinum.) I should mention it may take a while for your “3-month average combined balance” to actually reach the $100k level and officially qualify for Platinum Honors. Only after that will the 75% rewards bonus on credit card rewards kick in.

(Side note: Stack this offer with their Merrill Edge brokerage sign-up bonus.)

I realize not everyone will have this level of assets to move around, but if you do then it is worth considering. Both Platinum and Platinum Honors levels allow you to reach tiers that effectively give you over 2% cash back on all purchases. Here’s are the cash back rates after the Preferred Rewards bonuses:

  • Platinum Honors (75% bonus): 3.5% cash back on travel and dining, 2.625% cash back on all other purchases.
  • Platinum (50% bonus): 3% cash back on travel and dining, 2.25% cash back on all other purchases.
  • Gold (25% bonus): 2.5% cash back on travel and dining, 1.875% cash back on all other purchases.

Rewards comparison. This card has a more flexible rewards structure than their BankAmericard Travel Rewards card in that the points don’t have to offset a travel purchase. You can redeem at a flat 1 point = 1 cent value towards a statement credit or deposit into eligible Bank of America or Merrill Lynch® accounts (including deposit, investment or 529 accounts).

Getting a flat 2.625% (Platinum Honors) or 2.25% cash back (Platinum) on all purchases is a very solid base earning level. In terms of the competition, there are now multiple cash back cards in the 2% cash back range such as the Citi Double Cash Card with no annual fee. That means I wouldn’t bother with this card for everyday purchases if I wasn’t Platinum or Platinum Honors.

Also note that you can also earn similar levels of everything rewards (minus the travel/dining bonus category) but restricted to offsetting a travel-related purchase with the BankAmericard Travel Rewards card – except with no annual fee. The question then reverts back to if you can offset that $95 annual fee with the $100 annual incidental airline credit good towards seat upgrades, baggage fees, in-flight services and airport lounge fees. (Do I pay that much in baggage fees every year? Sadly I did this year.) If you can get max value out of that airline incidental credit every year, then that removes the major disadvantage when compared to the BofA Travel Rewards card. You can then enjoy the added perks like the $500 value sign-up bonus, $100 Global Entry/TSA PreCheck credit once every 4 years, and the higher rewards on travel/dining bonus.

Bottom line. The Bank of America Premium Rewards Credit Card is rather average in basic form, but is elevated into an excellent card if you can qualify for the Platinum or Platinum Honors tiers of their Preferred Rewards program for up to 3.5% cash back on travel and dining and 2.625% cash back on all other purchases. The $500 initial sign-up bonus is nice, but note the the $95 annual fee is not waived for the first year. Consider your ability to use up the $100 annual incidental airline credit.

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