Bank of America pays interest on savings accounts, but the rate is very low

Yes, Bank of America pays interest on savings accounts. The rate changes based on market conditions and the type of account you open. As of now, Bank of America's savings account rates are below 0.05% annual percentage yield (APY) for most customers—meaning a $10,000 balance earns less than $5 per year. The exact rate depends on which savings product you choose and whether you meet minimum balance requirements.

Bank of America offers several savings products: the regular Savings Account, the Money Market Account, and certificates of deposit (CDs). Each has different interest rates and rules. The regular savings account typically has the lowest rate. Money Market Accounts pay slightly more but require a higher minimum balance. CDs lock your money away for a set period (three months to five years) in exchange for a higher rate, though still modest compared to online banks.

Interest rates at traditional banks like Bank of America are lower than rates at online-only banks because they maintain physical branches and offer in-person service. If earning interest is your main goal, you may find better rates elsewhere. But if you value having a local branch, ATM access, and the ability to speak to someone in person, the trade-off may be worth it to you.

Key Takeaways

  • Bank of America savings accounts earn interest, but rates are typically below 0.05% APY, which means very little money accumulates over time.
  • The interest rate you receive depends on the account type—regular savings, Money Market Account, or CD—and your opening balance.
  • Bank of America's rates are lower than online banks because you pay for branch access and in-person service through lower returns on your savings.
  • Interest is calculated daily and deposited monthly, so you earn a small amount each month based on your balance.

How Bank of America calculates and pays interest

Bank of America calculates interest daily on your account balance. This means the bank looks at how much money you have each day, applies the annual interest rate to that amount, and adds up the daily earnings. At the end of each month, the total interest earned is deposited into your account.

The formula is simple: your balance multiplied by the APY, divided by 365 days. If you have $10,000 in a savings account earning 0.04% APY, you earn about $0.11 per day, or roughly $3.29 per month. The interest compounds monthly, meaning next month's interest is calculated on your balance plus the interest you just earned—but at these rates, the compounding effect is negligible.

Your interest earnings are reported to the IRS on Form 1099-INT if you earn $10 or more in a calendar year. You must report this income on your tax return, though the amount is usually so small it has little effect on your taxes.

Comparing Bank of America savings rates to other banks

Bank of America's savings rates are significantly lower than online banks and some credit unions. Online banks like Marcus, Ally, and American Express Personal Savings typically offer rates between 4% and 5% APY, depending on market conditions. That same $10,000 earning 4.5% APY would generate about $450 per year instead of $5.

Credit unions sometimes offer competitive rates on savings accounts, especially if you are a member. Some credit unions pay 0.5% to 1% APY on regular savings, and higher rates on money market accounts or CDs. The trade-off is that credit unions have fewer branches and ATMs than Bank of America.

The difference matters most if you are saving a large amount or leaving money untouched for years. A $50,000 balance at 0.04% earns $20 per year at Bank of America; the same balance at 4.5% earns $2,250. Over five years, that is a difference of $11,150 in interest earned.

Bank of America Money Market Accounts and CDs

Bank of America's Money Market Account pays a slightly higher rate than the regular savings account, but requires a minimum opening deposit (typically $2,500) and a higher minimum balance to avoid a monthly fee. The rate still remains below 0.10% APY in most cases. You can write checks and use a debit card with a Money Market Account, unlike a regular savings account.

Certificates of Deposit (CDs) lock your money for a fixed term—three months, six months, one year, three years, or five years. The longer the term, the higher the rate. A five-year CD at Bank of America currently pays around 4% to 5% APY, depending on when you open it. The catch is that you cannot withdraw the money before the term ends without paying an early withdrawal penalty, which typically wipes out all interest earned and may cost you part of your principal.

CDs make sense if you have money you will not need for a specific period and want a may provide rate. They are safer than investing in stocks because the rate is locked in and your deposit is insured by the FDIC up to $250,000. But if you might need the money sooner, the penalty makes CDs risky.

Minimum balances and monthly fees

Bank of America's regular Savings Account has no minimum opening deposit and no monthly maintenance fee. This makes it accessible to anyone, regardless of how much money they have to start with. You can open an account with $1 and keep it open indefinitely without paying fees.

However, some Bank of America savings products do charge fees. The Money Market Account charges a $12 monthly fee if your balance falls below $2,500. The eSavings Account (an online-only version) has no monthly fee but also pays a very low rate. Fees reduce your net interest earnings, so factor them into your decision.

If you maintain a high balance or link your savings account to a checking account with direct deposit, you may be able to waive fees through Bank of America's relationship pricing. Ask your local branch about current promotions and fee waivers.

FDIC insurance and account safety

All Bank of America savings accounts are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per bank, per account type. This means if Bank of America fails, the FDIC will return your money up to that limit. Your interest earnings are also protected.

If you have more than $250,000 to save, you can open multiple accounts in different account types (savings, Money Market, CD) to increase your coverage. Each account type is insured separately, so a $250,000 savings account and a $250,000 Money Market Account are both fully covered.

This insurance is one reason some people keep money at traditional banks even if the interest rate is low. The may provide of safety and the ability to walk into a branch and speak to someone in person has value beyond the interest rate.

When a Bank of America savings account makes sense

A Bank of America savings account is practical if you already have a checking account there and want a simple place to park money without switching banks. The lack of monthly fees and minimum balance requirements means you can open one with very little money and keep it open without worry. If you use Bank of America's ATM network regularly, having a savings account at the same bank makes transfers and withdrawals convenient.

A Bank of America savings account also makes sense if you value in-person banking. Some people prefer to deposit checks, withdraw cash, or discuss their finances face-to-face rather than online. The lower interest rate is the cost of that service.

If your goal is to earn as much interest as possible on your savings, a Bank of America savings account is not the best choice. Online banks and credit unions offer rates 50 to 100 times higher. But if you prioritize convenience, safety, and simplicity over maximum returns, Bank of America's savings products work fine.

Frequently Asked Questions

What is the current interest rate on Bank of America savings accounts?

Bank of America's savings account rate is typically below 0.05% APY, though rates change based on Federal Reserve decisions and market conditions. Check your account online or call your local branch for the exact current rate, as it may vary slightly by region or account type.

How often does Bank of America pay interest?

Bank of America calculates interest daily and deposits it into your account monthly. You see the interest payment appear in your account on the last day of each month or the first day of the next month, depending on when the bank processes it.

Can I earn more interest by opening a CD instead of a savings account?

Yes, CDs pay higher rates than savings accounts because you agree to lock your money away for a set period. A five-year CD at Bank of America currently pays around 4% to 5% APY, compared to under 0.05% for savings. The trade-off is that you cannot withdraw the money early without paying a penalty.

Is my interest earnings taxable?

Yes, interest earned on a Bank of America savings account is taxable income. If you earn $10 or more in a calendar year, the bank sends you a Form 1099-INT, and you must report the interest on your tax return. The tax rate depends on your overall income and tax bracket.

What happens to my interest if I close my account?

Interest earned up to the date you close your account is yours to keep. Bank of America will pay out any accrued interest along with your remaining balance when you close the account. You will still receive a 1099-INT for the year if you earned $10 or more, even if you closed the account partway through.