Bank of America savings accounts earn interest, but the rate changes with the federal funds rate and varies by account type
Bank of America pays interest on savings accounts, but the amount depends on which account you open and what the Federal Reserve is doing with interest rates. As of early 2024, Bank of America's standard savings account pays around 0.01% annual percentage yield (APY), which means $10,000 in the account earns roughly $1 per year. Their Premium Savings account pays a higher rate—typically 0.04% to 0.05% APY—but requires a higher opening balance and monthly minimum. Money Market Accounts at Bank of America currently pay between 0.01% and 0.05% APY depending on your balance tier.
The exact rate you see when you log in or visit a branch may differ from these figures because Bank of America adjusts rates regularly in response to Federal Reserve decisions. When the Fed raises its benchmark rate, banks typically raise savings rates within weeks. When the Fed cuts rates, savings rates fall. You can find your current rate by logging into your Bank of America account online, calling 1-800-432-1000, or visiting a branch.
Key Takeaways
- Bank of America's standard savings account currently pays around 0.01% APY, meaning interest earnings are minimal on most balances.
- Premium Savings and Money Market Accounts pay higher rates—typically 0.04% to 0.05% APY—but require larger minimum balances or deposits.
- Bank of America rates change when the Federal Reserve adjusts its benchmark rate, usually within a few weeks of a Fed announcement.
- You can check your current rate by logging into your online account, calling customer service, or visiting a branch in person.
How Bank of America calculates interest on your balance
Bank of America uses daily compounding, which means the bank calculates interest on your balance every day and adds it to your account. The interest is then credited to your account monthly. This method is standard across most banks and works in your favor because you earn interest on the interest that was already added.
The formula is simple: your balance multiplied by the APY, divided by 365 days. If you have $5,000 in a savings account earning 0.01% APY, you earn roughly $0.50 per year, or about $0.04 per month. The actual amount varies slightly depending on how many days are in each month and whether your balance changes.
Interest is credited monthly, usually on the last business day of the month. You can see the deposit in your transaction history labeled as "Interest Paid" or similar language. The amount appears in your available balance immediately and is yours to keep.
Account types and their current interest rates
| Account Type | Current APY Range | Minimum Balance | When to Choose It |
|---|---|---|---|
| Regular Savings | 0.01% | $0 to open | You want basic savings with no minimum balance requirement |
| Premium Savings | 0.04% to 0.05% | $10,000 to $25,000 | You have a larger balance and want a higher rate |
| Money Market Account | 0.01% to 0.05% | $2,500 to $25,000 | You want tiered rates based on balance and check-writing ability |
Rates shown are current as of early 2024 and change regularly. Log into your account or call Bank of America to confirm the exact rate for your account type and balance level, since rates vary by tier within Money Market Accounts.
Why Bank of America rates are lower than online banks
Bank of America's savings rates are significantly lower than those offered by online-only banks, which currently pay 4% to 5% APY on high-yield savings accounts. The difference exists because Bank of America operates thousands of physical branches and employs thousands of staff, which costs money. Online banks have no branches and minimal overhead, so they can pass higher rates to depositors.
If you keep money in a Bank of America savings account earning 0.01% APY, you are essentially paying for the convenience of walking into a branch or calling a local number. That trade-off makes sense if you frequently need in-person banking or value having a single institution for checking, savings, and loans. It does not make sense if you are trying to maximize interest earnings on money you will not touch for months or years.
Many people maintain a small balance in a Bank of America savings account for emergency access while keeping larger sums in a high-yield savings account elsewhere. This strategy gives you both convenience and competitive interest rates.
How Federal Reserve rate changes affect your savings rate
The Federal Reserve does not set savings account rates directly. Instead, it sets the federal funds rate, which is the interest rate banks charge each other for overnight loans. When the Fed raises this rate, banks have more incentive to raise the rates they offer on savings accounts to attract deposits. When the Fed cuts rates, banks lower savings rates because they have less incentive to pay you for your money.
Bank of America typically adjusts savings rates within one to three weeks of a Federal Reserve announcement. You can track Fed rate decisions by visiting the Federal Reserve's website (federalreserve.gov) or checking financial news sites. When the Fed announces a rate change, you can expect Bank of America to follow within days or weeks.
The relationship is not one-to-one: if the Fed raises rates by 0.25%, Bank of America may raise savings rates by 0.01% or less. Banks keep much of the benefit of higher rates for themselves rather than passing all of it to depositors.
What happens to interest if you withdraw money mid-month
Bank of America calculates interest based on your daily balance, so if you withdraw money partway through the month, you earn interest only on the amount you held each day. If you have $5,000 for 15 days and $3,000 for 15 days, the bank calculates interest on both balances and credits the total at month's end.
There is no penalty for withdrawals from a savings account, and you can withdraw as many times as you want without losing interest on the remaining balance. However, federal law previously limited savings account withdrawals to six per month; that rule was suspended in 2020 and has not been reinstated, so you can withdraw freely.
Frequently Asked Questions
Does Bank of America charge a monthly fee on savings accounts?
Bank of America does not charge a monthly maintenance fee on Regular Savings or Premium Savings accounts. Money Market Accounts may have a monthly fee if your balance falls below the required minimum, typically $12 to $25 per month. Check your account agreement or call 1-800-432-1000 to confirm the fee structure for your specific account.
Can I move money between my Bank of America checking and savings account without losing interest?
Yes. Transfers between your own Bank of America accounts do not affect interest earnings. Interest is calculated on your daily balance in the savings account, regardless of how often you move money in or out. The six-withdrawal limit that once applied to savings accounts no longer exists.
What is the difference between APY and interest rate?
APY (annual percentage yield) includes the effect of compounding, while the interest rate does not. Bank of America quotes savings rates as APY, which is the actual amount you will earn in a year if you leave the money untouched. This is the number you should use to compare accounts.
Will my Bank of America savings rate go up if the Fed raises rates?
Likely yes, but not by the same amount. If the Fed raises its benchmark rate by 0.25%, Bank of America may raise savings rates by 0.01% to 0.05%. The bank does not pass the full increase to depositors. You can check your rate after each Fed announcement by logging into your account online.
Is my money safe in a Bank of America savings account?
Yes. Bank of America is a member of the Federal Deposit Insurance Corporation (FDIC), which insures deposits up to $250,000 per account holder per bank. Your savings account balance is protected even if the bank fails, as long as it does not exceed $250,000.