Bank of America savings accounts earn interest, but the rate changes based on the account type and current market conditions

Bank of America offers several savings accounts, and each one earns a different interest rate. The rate you receive depends on which account you choose and how much money you keep in it. Interest rates at Bank of America change regularly — sometimes weekly — because they follow what the Federal Reserve does with its benchmark rate.

Right now, Bank of America's savings rates are lower than what you can find at online banks or credit unions. This is normal: large national banks like Bank of America typically offer lower rates than smaller institutions because they have more overhead costs and don't need to compete as aggressively for deposits. The tradeoff is that you get a physical branch network and the stability of a large institution.

To find the current rate for the specific account you're considering, you need to check Bank of America's website or call your local branch, because rates change and vary slightly by region. The rate you see today may not be the rate you get next month.

Key Takeaways

  • Bank of America offers multiple savings account types, each with its own interest rate that changes based on Federal Reserve decisions.
  • The most common Bank of America savings accounts are the Regular Savings Account and the Advantage Savings Account, with the Advantage version paying higher interest if you maintain a larger balance.
  • Bank of America's rates are typically lower than online banks or credit unions because the bank has physical branches and higher operating costs.
  • You can find current rates on Bank of America's website or by calling your branch, since rates change weekly and may vary slightly by location.

The Regular Savings Account versus the Advantage Savings Account

Bank of America's Regular Savings Account is the basic option. It has no minimum balance requirement to open it, and it earns interest on whatever you deposit. The interest rate on this account is typically the lowest of Bank of America's savings options.

The Advantage Savings Account pays a higher interest rate, but only if you keep a certain balance in the account. If your balance drops below that threshold, the rate drops to match the Regular Savings Account rate. This account also comes with other benefits like waived fees if you maintain the balance, which can matter more than the interest rate itself.

Both accounts are FDIC insured, which means your money is protected up to $250,000 if the bank fails. This protection applies to each account type separately, so you could have $250,000 in a Regular Savings Account and another $250,000 in an Advantage Savings Account and both would be fully protected.

How interest is calculated and when you receive it

Bank of America calculates interest daily based on your account balance. This means every day your money sits in the account, the bank figures out how much interest you've earned that day. However, the interest is compounded monthly, which means the interest gets added to your account once a month, usually on the last day of the month.

Compounding matters because once interest is added to your account, that interest itself starts earning interest the next month. If you leave the money untouched, your balance grows a little faster each month. The longer you leave money in the account, the more this compounds, though at Bank of America's current rates the effect is modest.

You can see your interest earnings in your monthly statement or by logging into your online account. Bank of America also reports the interest you earn to the IRS on a Form 1099-INT if you earn more than $10 in a year, which means you'll owe income tax on that interest.

Why Bank of America rates are lower than other banks

Bank of America is a national bank with thousands of branches, customer service centers, and employees. All of that costs money. Online banks like Ally or Marcus have no physical branches, so they spend less on overhead and can pass those savings to customers in the form of higher interest rates.

Credit unions, which are member-owned rather than shareholder-owned, also often pay higher rates because they operate on a nonprofit model. They exist to serve their members, not to maximize profit for investors.

The choice between Bank of America and a higher-rate alternative depends on what you value. If you need a physical branch to deposit checks or withdraw cash regularly, Bank of America's convenience might be worth the lower rate. If you rarely visit a branch and want the highest possible interest, an online bank or credit union will serve you better.

How to check your current rate and compare accounts

Visit bankofamerica.com and look for the savings accounts section. The website displays current rates for each account type. Rates are usually listed as an annual percentage yield, or APY, which tells you how much you'll earn in a year if you don't touch the money.

You can also call Bank of America at 1-800-432-1000 or visit a local branch to ask about current rates. If you already have an account, your monthly statement shows the APY you're earning.

To compare Bank of America against other options, check the rates at online banks (Ally, Marcus, Discover) and your local credit union. Write down the APY for each, the minimum balance required, and any fees. This gives you a clear picture of what you'd earn in a year at each institution.

What happens to your rate when the Federal Reserve changes rates

The Federal Reserve, which is the central bank of the United States, sets a benchmark interest rate that influences rates across the entire banking system. When the Fed raises its rate, banks typically raise the rates they pay on savings accounts. When the Fed lowers its rate, banks lower savings rates too.

Bank of America doesn't have to match the Fed's moves exactly or when ready, but it usually does within a few weeks. If you're earning interest at Bank of America and the Fed raises rates, you should expect your rate to go up — though it may take a few weeks to appear in your account.

You can track the Federal Reserve's rate decisions by visiting federalreserve.gov. This helps you understand whether rates are likely to go up or down in the coming months, which can help you decide whether to move money to a different bank or account type.

Frequently Asked Questions

Does Bank of America charge a fee to have a savings account?

Bank of America's Regular Savings Account has no monthly maintenance fee. The Advantage Savings Account may have a monthly fee if your balance drops below the required minimum, though the fee is waived if you maintain the balance or meet other conditions like having direct deposit. Check the current fee schedule on Bank of America's website or ask your branch.

Can I move my money to a higher-rate account if Bank of America's rate drops?

Yes. You can close your Bank of America account and move your money to another bank at any time. There's no penalty for doing this. If you want to move money to another Bank of America account type (like from Regular to Advantage Savings), you can do that through your online account or by visiting a branch.

What's the difference between APY and interest rate?

The interest rate is the percentage the bank pays you. APY (annual percentage yield) is the interest rate plus the effect of compounding over a year. APY is always slightly higher than the stated rate because it accounts for the interest you earn on your interest. Banks are required to show you the APY so you can compare accounts fairly.

If I have multiple savings accounts at Bank of America, do they each earn interest?

Yes. Each savings account you open earns interest at the rate for that account type. You can have multiple Regular Savings Accounts or multiple Advantage Savings Accounts, and each one earns interest separately. Each account is also insured separately up to $250,000.

How often should I check my savings account interest rate?

Check your rate when you open the account so you know what to expect. After that, check it every few months or whenever the Federal Reserve announces a rate change. If you notice your rate has dropped significantly and other banks are paying more, that's a good time to compare your options.