Bank of America savings accounts do pay interest, but the rate is typically very low
Yes, Bank of America savings accounts earn interest. However, the rate changes frequently and is usually lower than what you would earn at online banks or credit unions. As of now, Bank of America's standard savings account rate is well below 0.5% annual percentage yield (APY), though the exact rate depends on your account type and balance.
The rate you receive also depends on which savings product you choose. Bank of America offers several options: a basic savings account, a money market account, and certificates of deposit (CDs). Each has a different interest rate structure. Money market accounts typically pay slightly more than basic savings accounts. CDs pay higher rates but require you to lock your money away for a set period—anywhere from three months to five years.
Interest is calculated daily and deposited monthly. That means the bank adds up how much you had in the account each day of the month, divides by the number of days, applies the annual rate to that average, and credits the interest to your account on the last business day of the month.
Key Takeaways
- Bank of America savings accounts earn interest, but the rate is typically below 0.5% APY and changes without notice.
- Money market accounts at Bank of America pay slightly more interest than basic savings accounts but may require a higher minimum balance.
- CDs lock your money for three months to five years in exchange for a may provide higher rate, which you can check on Bank of America's website.
- Interest is calculated daily and deposited to your account once a month, usually on the last business day.
- You can check your current rate by logging into your Bank of America account online or calling customer service at the number on your card.
How Bank of America calculates and deposits interest
Bank of America uses daily compounding, which means interest is calculated on your balance every single day. The bank adds up your daily balances for the entire month, divides by the number of days in that month, and applies the annual percentage yield to that average daily balance. This method slightly favors you because deposits made early in the month earn interest for more days.
Interest posts to your account once per month, typically on the last business day. You will see the deposit in your transaction history. The amount will be small—on a $1,000 balance at 0.01% APY, you would earn about 10 cents per month. The lower the rate, the less noticeable the monthly deposit becomes.
If you close your account before the end of the month, you forfeit any interest that has accrued but not yet posted. If you withdraw money mid-month, you still earn interest on the balance you held; the bank does not penalize you for withdrawals.
Comparing Bank of America rates to other banks
Bank of America's savings rates are significantly lower than what online banks and some credit unions offer. Online banks often pay 4% to 5% APY on savings accounts, while Bank of America typically pays less than 0.5%. The difference compounds over time: on a $10,000 balance, Bank of America might earn you $30 to $50 per year, while an online bank at 4.5% would earn you $450.
The trade-off is convenience and branch access. Bank of America has thousands of physical locations where you can deposit cash, speak to a person, or handle complex transactions. Online banks have no branches but lower overhead costs, which they pass on as higher rates. Credit unions sometimes offer competitive rates and may waive fees if you meet certain conditions.
If you keep most of your money in a Bank of America checking account for daily spending, keeping a small emergency fund in their savings account is reasonable. If you are trying to maximize interest on a large balance you do not need to access often, an online savings account or CD ladder will earn you significantly more.
Money market accounts and CDs as alternatives
Bank of America's money market account typically pays slightly more interest than the basic savings account, but it usually requires a higher minimum balance—often $2,500 or more—and may limit the number of withdrawals you can make per month. The rate is still low compared to online options, but it is better than basic savings if you meet the balance requirement.
Certificates of deposit (CDs) are a different product. You agree to leave your money untouched for a specific period—3 months, 6 months, 1 year, 2 years, 3 years, or 5 years. In exchange, the bank guarantees a fixed interest rate for that entire period. Bank of America's CD rates are higher than savings rates but still typically lower than online banks. The longer the term, the higher the rate, though this is not always true when interest rates are falling.
If you have money you will not need for a year or more, a CD ladder—buying multiple CDs with different maturity dates—lets you capture higher rates while keeping some money accessible each year. You can check Bank of America's current CD rates on their website or by visiting a branch.
Fees that reduce your interest earnings
Bank of America charges a monthly maintenance fee on some savings accounts, typically $4 to $12 per month depending on the account type and whether you meet balance or deposit requirements. This fee directly reduces your interest earnings. On a savings account earning 0.01% APY, a $12 monthly fee wipes out an entire year's worth of interest.
You can avoid the monthly fee by maintaining a minimum balance—usually $300 to $500—or by setting up direct deposits. Some accounts waive the fee if you link them to a Bank of America checking account. When you open a savings account, ask the banker or check the account agreement to see what fee applies and how to avoid it.
Other fees to watch: if you exceed six withdrawals or transfers per month (a federal limit that was suspended during the pandemic but may be enforced again), you may face a fee per excess transaction. Overdraft fees apply if your account goes negative. These fees can easily exceed any interest you earn, so managing your account carefully matters more than chasing a higher rate.
How to check your current interest rate
Your current interest rate is listed in your account agreement and on Bank of America's website. Log into your online banking account, navigate to your savings account details, and look for "Annual Percentage Yield" or "APY." The rate shown is what you are currently earning. You can also call the customer service number on the back of your debit card and ask a representative to tell you your rate.
Bank of America can change your rate at any time without notice, though they typically notify customers of significant changes by mail or email. If you want to know when your rate changes, check your account online once a month or set a calendar reminder to review it quarterly. If the rate drops significantly and you have a large balance, moving money to an online bank or CD may make financial sense.
Do not rely on the rate you see advertised in a Bank of America branch or online—that is the rate for new accounts, and your existing account rate may differ. Always check your own account to see what you are actually earning.
When a Bank of America savings account makes sense
A Bank of America savings account is most useful if you need a place to park money temporarily while you decide what to do with it, or if you want the security of a physical branch for deposits and withdrawals. It is also reasonable if you already have a checking account there and want to keep everything in one place for simplicity, as long as you understand you are trading interest earnings for convenience.
A Bank of America savings account makes less sense if you have a large balance you plan to keep untouched for months or years. In that case, an online savings account, a CD, or a money market account elsewhere will earn you substantially more. The difference between 0.01% and 4.5% on $50,000 is $2,250 per year—enough to justify opening an account elsewhere.
Frequently Asked Questions
How much interest will I earn on $1,000 in a Bank of America savings account?
At current Bank of America rates (typically below 0.5% APY), you would earn less than $5 per year on a $1,000 balance. The exact amount depends on the current rate, which changes frequently. You can calculate it by multiplying your balance by the APY listed in your account details and dividing by 12 for a monthly estimate.
Can I move my money to a higher-paying account without losing interest?
Yes. You can transfer money from a Bank of America savings account to another bank's account at any time without penalty. Interest accrues through the last day of the month you transfer, and you will receive that month's interest deposit even after you move the money. There is no early withdrawal fee on savings accounts.
Is my money safe in a Bank of America savings account?
Yes. Bank of America is FDIC-insured, meaning deposits up to $250,000 per account type are protected by the federal government. Your savings account is insured separately from your checking account, so you have $250,000 protection in each.
What happens to my interest if I withdraw money mid-month?
You still earn interest on the balance you held. The bank calculates interest based on your daily balance throughout the month, so withdrawals do not erase interest already earned on the money that was there. You forfeit interest only on the amount you withdrew, for the days after the withdrawal.
Should I open a CD instead of a savings account?
A CD makes sense if you have money you will not need for at least three months and want a may provide higher rate. The trade-off is that you cannot access the money without paying an early withdrawal penalty. If you might need the money sooner, a savings account is more flexible, even if the rate is lower.