Bank of America does pay interest on savings accounts, but the rate depends on which account you open
Bank of America offers three savings products: the Regular Savings Account, the Advantage Savings Account, and the Money Market Account. Each one earns interest, but the rate you receive varies by account type, your balance, and current market conditions. The rates change frequently and are typically lower than what online banks offer for the same type of account.
Interest rates at Bank of America are set by the bank and published on their website. You can view current rates before opening an account. The bank compounds interest daily and deposits it monthly, meaning you earn interest on your interest as it accumulates.
Key Takeaways
- Bank of America's Regular Savings Account earns interest, but the rate is usually less than 0.01% and does not increase with higher balances.
- The Advantage Savings Account pays a higher rate if you maintain a minimum balance, typically $500 or more depending on your account tier.
- The Money Market Account offers the highest rate among Bank of America savings products and requires a larger opening deposit.
- Interest rates change without notice and are lower than rates offered by online banks and credit unions for comparable accounts.
- Interest is compounded daily and credited to your account once per month.
Regular Savings Account interest rates and minimums
The Regular Savings Account is Bank of America's basic savings option. It requires no minimum opening deposit and no monthly maintenance fee. The interest rate on this account is very low—typically less than 0.01% annual percentage yield (APY). This means a $1,000 balance would earn less than $0.10 per year.
The rate does not increase if you deposit more money or maintain a higher balance. Bank of America does not publish a tiered rate structure for this account, so every customer earns the same rate regardless of how much they have saved. The rate can change at any time without advance notice.
Advantage Savings Account and tiered rates
The Advantage Savings Account pays a higher interest rate than the Regular Savings Account, but only if you meet a minimum balance requirement. Bank of America typically requires $500 to $2,500 in the account to earn the higher rate, depending on your account tier. If your balance falls below the minimum, the rate drops to the regular savings rate.
The exact rate depends on your Preferred Rewards membership level. Customers with higher Preferred Rewards tiers (achieved by maintaining certain balances in Bank of America accounts or investing through their Merrill Edge platform) earn higher interest rates on the Advantage Savings Account. The difference between tiers can be 0.01% to 0.05% APY, which is still very small in dollar terms but higher than the regular account.
Money Market Account rates and requirements
The Money Market Account is Bank of America's highest-yield savings product. It typically requires a minimum opening deposit of $2,500 and pays a higher interest rate than either savings account. Like the Advantage Savings Account, the rate is tiered based on your balance and Preferred Rewards membership level.
The Money Market Account also comes with check-writing privileges and a debit card, making it more flexible than a traditional savings account. However, federal regulations limit you to six withdrawals per month (including checks, transfers, and debit card purchases). Exceeding this limit may result in fees or account closure.
How Bank of America rates compare to other banks
Bank of America's savings rates are significantly lower than rates offered by online banks and many credit unions. Online savings accounts often pay 4% to 5% APY, while Bank of America's highest-tier Money Market Account typically pays less than 0.5% APY. This difference compounds over time: $10,000 in a Bank of America savings account earning 0.01% would generate about $1 per year, while the same amount in a 4.5% online account would earn $450 annually.
The trade-off is convenience and branch access. Bank of America has physical locations nationwide, and you can deposit checks in person or at ATMs. Online banks have no branches but offer higher rates because they have lower operating costs. Credit unions may offer competitive rates to members and often have lower fees.
When interest rates change and how to monitor yours
Bank of America changes its savings rates periodically in response to Federal Reserve decisions and market conditions. The bank does not announce rate changes in advance and does not notify customers by mail or email when rates drop. You can check your current rate by logging into your online account, calling customer service at 1-800-432-1000, or visiting a branch.
The Federal Reserve's actions have the largest influence on savings rates across the banking industry. When the Federal Reserve raises its benchmark interest rate, banks typically raise savings rates. When the Federal Reserve lowers rates, banks lower savings rates. However, banks do not always pass rate increases to customers as quickly as they pass decreases, so your rate may lag behind Federal Reserve changes.
Fees that reduce your interest earnings
Bank of America charges a monthly maintenance fee on some savings accounts, typically $5 to $12 per month depending on the account type and your Preferred Rewards tier. This fee is deducted from your account balance and directly reduces the interest you earn. For example, a $5 monthly fee on a $1,000 balance earning 0.01% APY would eliminate your interest earnings entirely.
You can avoid the monthly fee by maintaining a minimum balance (usually $500 to $2,500) or by setting up a direct deposit. Some Preferred Rewards members also have the fee waived automatically. Check your account terms to see which fee waiver options apply to you.
Frequently Asked Questions
How often does Bank of America pay interest on savings accounts?
Bank of America compounds interest daily but credits it to your account once per month. This means interest is calculated every day based on your balance, but you see the deposit only once a month, typically on the last business day of the month.
Can I earn interest on a Bank of America checking account?
Most Bank of America checking accounts do not earn interest. The bank offers a few specialty checking products that pay very small interest rates, but these are rare and require high minimum balances. A regular checking account is designed for transactions, not savings.
What happens to my interest if I close my savings account?
You receive all interest earned up to the date you close the account. Bank of America calculates interest through the last day your account is open and includes it in your final balance. There is no penalty for closing a savings account early.
Does Bank of America FDIC insure savings account balances?
Yes. Bank of America is an FDIC-insured bank, and savings accounts are covered up to $250,000 per depositor per bank. If you have multiple savings accounts at Bank of America, the $250,000 limit applies to the combined total across all your savings accounts at that bank.
Should I move my savings to an online bank for higher interest?
That depends on whether you value branch access and in-person service. If you rarely visit a branch and want to maximize interest earnings, an online bank will pay significantly more. If you prefer the ability to deposit checks in person or speak to someone face-to-face, the convenience of Bank of America may be worth the lower rate.