Bank of America is turning to private jets and exotic cars to compete with American Express and JPMorgan Chase and lure big spenders to its credit cards.
The Charlotte, North Carolina-based company revamped its rewards program and debuted a new $550-a-year metal credit card that offers extra points on travel and dining purchases along with a $300 travel credit, according to a statement Thursday. Customers can apply for the card online starting in February.
“We did have a gap within the high-net-worth and the ultra-high-net-worth client base,” John Sellers, rewards executive at Bank of America, said during a media briefing Wednesday. “We are confident we closed that gap.”
With the revamp, Bank of America added two new tiers to its preferred rewards program to capture high-net-worth and ultrawealthy clients — those with $1 million and $10 million or more in assets with the firm, respectively. Diamond and Diamond Honors members will receive benefits including reduced investment fees and improved mortgages and home-equity lines of credit.
Banks are in a high-stakes battle for affluent clients with more money to spend and save. For companies like Bank of America, luring such card customers could help the firm line up assets for its sprawling wealth management business.
For those enrolled in the rewards program and with at least $100,000 in assets held at Bank of America, the firm’s new Premium Rewards Elite card will offer 3.5 points per dollar spent on travel and dining, making it one of the highest-paying cards for wealthy individuals.
The two new rewards tiers will give customers access to perks such as driving exotic cars 160 miles an hour at Charlotte Motor Speedway and the ability to book private jets.
“As we move up the spectrum, the lifestyle benefits have a bigger impact,” Sellers said.
Bank of America is also adding a new partner rewards program for customers. Royal Dutch Shell Plc will be its first company in that push, with the tie-up giving cardholders discounts on gas purchases. The lender has plans to add additional partners, including ride-sharing services and grocery stores, said Victoria Dravneek, head of personalization and loyalty strategy.
The bank has been revamping many of its credit card offerings, unveiling a cash-back card in July and one for businesses a month later. But the firm has typically punched below its weight in the business. While the company is America’s second-largest bank and the country’s biggest debit card issuer, it usually ranks only fifth in credit cards, according to industry publication Nilson Report.
The Premium Rewards Elite card includes a 50,000-point sign-up bonus after users spend $3,000 within the first 90 days. With the new card, Bank of America is emulating Amex’s Platinum card and JPMorgan’s Chase Sapphire Reserve card. More recently, Wells Fargo and Capital One Financial said they also want to capture more premium credit card customers.
“It’s not our strategy to be like what Chase did with Chase Sapphire Reserve, where they mass-marketed the product and offered enormous sign-on bonuses and things of that nature,” said Jason Gaughan, credit card executive with Bank of America. “Our strategy is really to focus on customers that are interested in the card, are interested in being part of Preferred Rewards, and people who want to bank with us and are willing to bring over assets.”