Bank of America Savings Accounts Pay Interest, but the Rate Is Usually Very Low
Yes, Bank of America savings accounts earn interest. The rate varies depending on which savings product you open—regular savings accounts, money market accounts, and certificates of deposit (CDs) all pay different rates. As of now, Bank of America's standard savings account rates are well below 1% annually, which means a $10,000 balance might earn $20 to $30 per year or less. The actual rate you receive depends on your account type, your balance, and current market conditions, which change regularly.
The reason rates are low is that Bank of America sets its own rates independently. Banks are not required to pass along the full benefit of higher interest rates set by the Federal Reserve. Many online banks and credit unions offer rates five to ten times higher on the same type of account, so if interest earnings matter to your financial plan, comparing options before opening an account is worth your time.
Key Takeaways
- Bank of America savings accounts do earn interest, but the rate is typically less than 0.5% annually, meaning interest earnings are modest on most balances.
- Different account types—regular savings, money market, and CDs—have different rates, and rates change based on Federal Reserve policy and Bank of America's own decisions.
- You can check the current rate on Bank of America's website or by calling their customer service line before opening an account.
- Online banks and credit unions often offer significantly higher savings rates than Bank of America for the same type of account.
How Bank of America Savings Account Interest Works
Interest on a Bank of America savings account is calculated daily and paid monthly. This means the bank looks at your balance each day, applies the annual interest rate to that balance, and adds up the daily interest to pay you once a month. If your balance changes during the month, the interest you earn changes too—higher balance, higher interest that month.
The interest rate itself is annual percentage yield (APY), which is the rate you would earn in a year if you never withdrew money and rates stayed the same. Bank of America publishes its current rates on its website under the specific account product pages. Rates are not negotiable—you get the rate the bank is offering on the day you open the account, and it can change at any time after that.
Different Bank of America Savings Products and Their Rates
Bank of America offers several savings vehicles, each with its own rate structure. A regular savings account (sometimes called a basic savings account) typically has the lowest rate and no minimum balance requirement. A money market account usually pays a slightly higher rate but may require a larger opening balance and limits how many withdrawals you can make per month. A certificate of deposit (CD) locks your money away for a set period—three months, six months, one year, or longer—and pays a fixed rate that is usually higher than savings or money market accounts, but you cannot withdraw the money early without a penalty.
Bank of America also offers tiered rates on some accounts, meaning the rate increases as your balance grows. For example, a savings account might pay 0.01% on balances under $25,000 and 0.02% on balances above that. These differences are small in dollar terms, but they reflect how the bank structures its products. Check the specific account page for the current rate structure before opening.
Why Bank of America Rates Are Lower Than Other Banks
Bank of America is a large national bank with thousands of branches and ATMs. That physical infrastructure costs money, and the bank passes some of those costs to customers through lower interest rates on deposits. Online banks have no branches, so they can offer higher rates because their operating costs are lower. Credit unions are member-owned nonprofits, so they return profits to members through better rates and lower fees.
The Federal Reserve sets a target interest rate that influences what banks pay, but banks are free to pay less. When the Federal Reserve raises rates, Bank of America may raise its savings rates slowly or not at all. When rates fall, Bank of America often cuts its rates quickly. This is why comparing rates across banks matters—the difference between 0.01% at Bank of America and 4.5% at an online bank is real money over time.
How to Find Bank of America's Current Savings Rates
Bank of America publishes its current rates on its website under each account product page. You can visit bofa.com, navigate to the savings section, and look for the rate disclosure. The rate shown is the APY, and it includes any promotional rates that may be running. Promotional rates are temporary and higher than the standard rate, but they expire after a set period—usually three to six months.
You can also call Bank of America customer service at 1-800-432-1000 to ask about current rates. If you already have a Bank of America account, you can log into your online banking portal and view your account's current rate under the account details. Rates change frequently, so if you are comparing Bank of America to other banks, check all rates on the same day to make a fair comparison.
What Happens to Your Interest If Rates Change
If you have a regular savings account or money market account, your rate can change at any time after you open the account. Bank of America does not have to notify you in advance, though it often does. If rates go down, your interest earnings go down. If rates go up, your earnings go up. The rate is not locked in unless you open a CD, which has a fixed rate for the entire term.
If you are unhappy with your rate after it drops, you can close the account and move your money to another bank. There is no penalty for closing a savings account, though some banks charge a fee if you close within a short period after opening. Bank of America does not charge a closing fee on savings accounts, so you are free to leave if the rate no longer works for you.
Comparing Bank of America to Other Savings Options
If you want to maximize interest earnings, compare Bank of America's rates to online banks, credit unions, and high-yield savings accounts. Online banks like Marcus, Ally, and Discover often pay rates between 4% and 5% on savings accounts, which is 100 to 500 times higher than Bank of America's standard rate. Credit unions in your area may also offer competitive rates, especially if you are a member. You can search for credit unions near you on the CO-OP Network website or through your employer, which may offer membership.
The tradeoff is convenience. Bank of America has physical branches and ATMs where you can deposit cash and withdraw money in person. Online banks have no branches, so you deposit by mail or transfer, and you withdraw by transfer or ATM. If you need frequent in-person access, Bank of America may be worth the lower rate. If you rarely visit a branch, an online bank's higher rate will earn you significantly more money over time.
Frequently Asked Questions
How much interest will I earn on $10,000 in a Bank of America savings account?
At a typical Bank of America savings rate of 0.01% to 0.05% annually, $10,000 would earn $1 to $5 per year. The exact amount depends on the current rate and your account type. You can calculate your own earnings by multiplying your balance by the APY and dividing by 12 for a monthly estimate.
Can I get a higher rate if I keep a larger balance?
Some Bank of America savings accounts have tiered rates, meaning the rate increases at higher balance levels. Check your specific account's rate disclosure to see if tiering applies. Even with tiering, the rates remain low compared to online banks and credit unions.
Is my interest may provide, or can the bank take it away?
Interest is not may provide. Bank of America can lower your rate at any time on savings accounts and money market accounts. The rate is locked only on CDs for the term you choose. If your rate drops and you are unhappy, you can move your money to another bank without penalty.
Do I have to pay taxes on the interest I earn?
Yes, interest earned on a Bank of America savings account is taxable income. The bank will send you a Form 1099-INT at the end of the year if you earned $10 or more in interest. You report this on your tax return. Even small amounts of interest are technically taxable, though the amount may be too small to affect your tax bill.
What is the difference between APY and interest rate?
APY (annual percentage yield) includes the effect of compounding—interest earned on your interest. The interest rate is the base percentage. For savings accounts, the difference is usually small because interest is paid monthly, but APY is the number that matters for comparing accounts across banks.