Bank of America savings accounts earn interest, but the rate changes and is usually very low

Bank of America pays interest on savings accounts, but the amount you earn depends on which account you open and what the current rate is. The bank sets its own rates and changes them frequently — sometimes weekly. Right now, most Bank of America savings accounts earn less than 0.01% annual percentage yield (APY), which means on $1,000 you might earn less than 10 cents per year.

The rate you see advertised today will not be the rate you earn next month. Banks lower rates when the Federal Reserve lowers its benchmark rate, and raise them when the Fed raises it. If you keep money in a Bank of America savings account for a year, you should expect the interest rate to shift at least once, possibly several times.

The actual amount of interest you earn is calculated daily but usually paid monthly. The bank takes your account balance, multiplies it by the APY, divides by 365, and credits that amount to your account each day. At the end of the month, all those daily amounts are added together and deposited as one payment.

Key Takeaways

  • Bank of America savings accounts currently earn less than 0.01% APY on most account types, meaning very little interest on your money.
  • The interest rate changes frequently and is set by Bank of America, not by you — you cannot negotiate or lock in a rate.
  • Interest is calculated daily but paid monthly, so you see one deposit per month rather than daily deposits.
  • If you want to earn more interest, online banks and credit unions often offer rates that are 10 to 50 times higher than Bank of America.

How Bank of America calculates and pays your interest

The bank uses a method called daily compounding. Each day, it takes your account balance at the end of that day, multiplies it by the APY, and divides by 365. That amount is added to a running total. At the end of the month, the total is deposited into your account as a single payment.

This means the more money you have in the account and the longer you keep it there, the more interest you earn — but the difference is small at current rates. On $10,000 at 0.01% APY, you would earn about $1 per year, or roughly 8 cents per month.

The interest payment appears as a deposit in your account statement. You can see it listed separately so you know exactly how much you earned that month. If you close the account before the end of the month, you receive interest only for the days you held the money.

Why Bank of America rates are lower than other banks

Bank of America is a large national bank with thousands of branches and ATMs. It spends money maintaining those physical locations, paying tellers, and running customer service centers. Online banks and credit unions have lower costs because they do not have branches, so they can pay higher interest rates and still make a profit.

Bank of America also makes money by lending out the deposits you place in savings accounts. The bank borrows your money at a very low rate (the interest it pays you) and lends it out at a much higher rate (the interest borrowers pay on mortgages, car loans, and credit cards). The difference is the bank's profit. Because Bank of America is large and well-known, it does not need to offer high rates to attract deposits — people keep money there for convenience and branch access.

If earning interest is important to you, you may want to compare Bank of America's rate to what online banks and credit unions offer. The difference in earnings can be significant over time, especially on larger balances.

Different Bank of America savings account types and their rates

Bank of America offers several savings products, and the interest rate may vary slightly between them, though all are currently very low. The main types are regular savings accounts, money market accounts, and certificates of deposit (CDs).

A regular savings account has no minimum balance requirement and no lock-in period — you can withdraw money whenever you want. The interest rate is the lowest of the three.

A money market account combines features of a savings account and a checking account. It usually requires a higher minimum balance (often $2,500 or more) and may pay slightly more interest in exchange. You can write checks or use a debit card, but the bank may limit how many withdrawals you make per month.

A certificate of deposit (CD) requires you to lock your money away for a set period — usually three months, six months, one year, or longer. In exchange, the bank pays a higher interest rate. If you withdraw the money before the CD matures, you pay a penalty. CDs currently pay more than savings accounts, but the rate is still low compared to online banks.

How to find Bank of America's current interest rate

Bank of America publishes its current rates on its website under the savings and money market account pages. You can also call the bank at 1-800-432-1000 or visit a local branch to ask what the rate is today.

The rate shown on the website is the rate new customers will receive when they open an account. Existing customers may see a different rate depending on their account type and balance. Some Bank of America accounts offer slightly higher rates if you maintain a higher balance or have other products with the bank, like a checking account or credit card.

Because rates change frequently, the rate you see today may not be the rate you earn next week. If you want to track how your rate changes over time, you can check your monthly statements — the interest payment will show you what rate the bank used that month.

When Bank of America raises or lowers its savings rates

Bank of America typically changes its savings rates when the Federal Reserve changes its benchmark interest rate. The Federal Reserve is the central bank of the United States, and it sets a target range for the rate that banks charge each other to borrow money overnight. When the Fed raises this rate, banks usually raise the rates they pay on savings accounts. When the Fed lowers it, banks usually lower savings rates.

However, banks do not always move their rates at the same time or by the same amount. Bank of America may wait a few weeks after a Fed change before adjusting its rates, or it may change rates without a Fed announcement if it wants to attract or discourage deposits.

You can track Federal Reserve rate changes on the Federal Reserve's website, but you cannot predict exactly when or by how much Bank of America will adjust its rates. The best approach is to check the bank's website or your statement monthly if you want to know your current rate.

Comparing Bank of America to other savings options

If you want to earn more interest, you have other options. Online banks like Marcus, Ally, and Discover often pay 4% to 5% APY on savings accounts — roughly 400 to 500 times more than Bank of America. Credit unions, which are member-owned financial institutions, sometimes offer competitive rates as well.

The trade-off is that online banks have no physical branches. You deposit money by transferring it from another bank account, and you withdraw by transferring it back. This takes one to three business days. If you need cash when ready or prefer to work with a person in person, Bank of America's branches may be worth the lower interest rate.

You can also open a savings account at an online bank while keeping a checking account at Bank of America. Many people do this — they use Bank of America for everyday banking and bill payments, and keep their savings at an online bank to earn more interest. Your money is insured by the Federal Deposit Insurance Corporation (FDIC) at both types of banks, so your deposits are protected up to $250,000 per account.

Frequently Asked Questions

Does Bank of America pay interest on checking accounts?

Most Bank of America checking accounts pay no interest or pay interest only on very high balances. Some premium checking accounts may pay a small amount, but the rate is still much lower than savings accounts. If you want to earn interest, keep your money in a savings account, money market account, or CD.

How often is interest deposited into my account?

Interest is calculated daily but deposited monthly. You see one payment per month, usually on the last business day of the month. The amount reflects all the interest earned during that month.

Can I lock in a Bank of America savings rate?

No, regular savings accounts and money market accounts have variable rates that change whenever the bank decides to change them. Certificates of deposit (CDs) are the only way to lock in a rate — you agree to leave your money untouched for a set period, and the bank guarantees the rate for that time.

What happens to my interest if I withdraw money before the end of the month?

You receive interest only for the days you held the money. If you withdraw on the 15th of the month, you earn interest for the first 15 days, and that amount is added to your withdrawal. The remaining days of the month earn no interest.

Is my savings account insured if Bank of America fails?

Yes. The FDIC insures deposits up to $250,000 per account type at each bank. Your Bank of America savings account is covered, so even if the bank failed, you would not lose your money up to that limit.