Bank of America is hoping to lure millions of banking customers into its rewards programs by offering commission-free online trading for stocks and exchange-traded funds.
Commission-free trading for the bank's top-tier rewards programs has been available in some form since 2006, but until now those banking customers had to have at least $50,000 in banking or investment accounts. Now, customers in the bank's lowest tier, those with at least $20,000 in their accounts, will qualify for up to 10 free trades a month.
This represents the latest tweak in the Merrill Edge self-directed online platform, which has grown to $185 billion from $45 billion in 2010, according to Aron Levine, head of consumer banking and Merrill Edge.
Mr. Levine said the hope is that 10 free trades per month will be enough to entice the estimated "4 to 5 million" current Bank of America customers who already qualify for the lowest level of the Preferred Rewards program but don't participate.
Launched in 2014, Preferred Rewards is a loyalty program based on a client's full relationship across Bank of America banking and/or Merrill Edge and Merrill Lynch investment accounts.
More than 5.25 million clients are currently enrolled in Preferred Rewards, with combined client banking and investment assets over $425 billion.
Until now, free trades have been limited to the top two tiers of the rewards programs.
The top Platinum Honors level, which requires $100,000 worth of savings or investments with the bank, qualifies for 100 free trades per month.
The Platinum level, which requires at least $50,000 on the bank platforms, qualifies for 30 free trades per month.
Neil Bathon, managing partner at FUSE Research Network, called the free-trade offer an inevitable move.
"They're doing the natural and logical thing that links different products and services together," he said. "This is the future of financial services. They're giving up commissions they will be forced to give up anyway, and doing it in a way that they can be on the leading edge."