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A reward credit card for those who carry a balance

Bank of America just rolled out a new type of reward credit card for people who carry a balance. The BankAmericard Better Balance Rewards card gives customers $25 cash back each quarter if they pay more than the minimum required each month and make that payment on time.

“There was definitely a need for this that was not being met,” said Titi Cole, Bank of America’s senior executive for retail products. “It rewards customers for what they’re trying to do, which is pay off their balances and manage their debt responsibly, and hopefully deepens their relationship with us.”

The card has no annual fee and the interest rate is zero percent for the first 12 months on new purchases and balance transfers made during the first 60 days.

Those who have another relationship with the bank, such as a checking or savings account, will get an extra $5 bonus each quarter they qualify for cash back.

“I actually like this card and I don’t say that about a lot of credit cards,” said John Ulzheimer, president of consumer education at “Anytime a bank is willing to give me free money, I’ll gladly take it. And that $25 a quarter really starts to add up over time.”

Other consumer advocates who’ve looked at the card agree: It rewards people for doing the right thing.

“Giving people an incentive to reduce their debit rather than an incentive to increase spending is definitely an improvement,” said Tom Feltner, director of financial services at the Consumer Federation of America.

To get the $25 cash each quarter, cardholders must make more than the minimum payment each month. And that’s the key to paying down credit card debt for those who can’t pay the balance in full.

“Only making the minimum payment is a treadmill to nowhere,” said Greg McBride, senior financial analyst at “It pays down the balance at a snail’s pace and even on a modest balance; the interest charges can multiply over time and be several times larger than the original balance you carried.”

Bank of America plans to market the Better Balance Rewards card to its current customers through information at the branches and targeted marketing.

“They may already have a card with us and this could be their second card,” Cole told me. “Or they may be carrying a balance with a competitor and now we can offer them a more compelling value proposition than what they have.”

As with any credit card offer, the devil is in the details.

“No interest for the first year is a great deal for people who carry a balance, but after that your interest rate is pegged to your creditworthiness,” noted Gerri Detweiler, personal finance expert at “Then it could go as high as 21.99 percent.”

Also, there’s still a penalty for making a late payment: a fee of up to $35 and that zero percent interest period will disappear. The new rate could be as high as 29.99 percent.

Is this card for you?
If you carry a credit card balance that you can’t pay off, this might be the way to go, especially if you have the discipline to pay more than the minimum and make those payments on time each month. You’ll get 12 months to tackle the balance with no finance charges.

The key is to keep the new spending in check – even with a zero percent interest rate – or you could be worse off than you started.

“That is always the risk with a no-interest grace period,” said Gail Cunningham with the National Foundation for Credit Counseling. In theory, it’s a great tool. In practice, it can trip you up if you’re not financially disciplined.”

Before you apply for this or any other card, consider your options.

“If you’re really after zero percent interest on either a balance transfer or on introductory purchases, there are cards that offer that well beyond the 12-month mark,” McBride told me. “So it’s important to shop around and find the card that’s best suited for you need.”

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Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitteror visit The ConsumerMan website.