Bank of America's CD rates are low because the bank prioritizes customer deposits through other products and relies on its brand name rather than rate competition

Bank of America sets its CD rates based on what it needs to attract deposits, not what the market will bear. As one of the largest banks in the country, BofA already holds trillions in customer deposits. It does not need to offer competitive rates to bring in new money — existing customers stay because of convenience, branch access, and integrated checking accounts, not because the CD rate is attractive.

The bank makes more profit by keeping rates low. When you lock money into a CD at a lower rate, BofA lends that money out at higher rates to mortgage borrowers, credit card holders, and business customers. The wider the gap between what it pays you and what it charges others, the more the bank earns. A low CD rate is intentional.

This is not unique to Bank of America, but the effect is sharper there because the bank is large enough not to compete on rate. Smaller banks and online-only banks must offer higher CD rates to pull deposits away from the big names. BofA does not have to.

Key Takeaways

  • Bank of America's CD rates stay low because the bank already holds enough deposits and does not need to compete on rate to attract new customers.
  • The bank profits more when the gap between what it pays on CDs and what it charges borrowers is wide, so low rates are a deliberate choice.
  • Online banks and regional banks offer higher CD rates because they must compete for deposits that BofA gets automatically through brand recognition.
  • Your money in a BofA CD is safe and FDIC-insured, but you will earn less interest than you would at a competitor offering the same term.
  • Moving a CD to another bank when it matures is straightforward and costs nothing, so comparing rates before renewal is worth the time.

How Bank of America's deposit strategy differs from smaller competitors

Large national banks like Bank of America operate under a different economic model than online banks or regional institutions. BofA has 4,000 physical branches, a recognizable name, and millions of customers who already have checking accounts there. A customer with a BofA checking account will often open a CD at the same bank for convenience, even if the rate is lower elsewhere.

Online banks have no branches and no existing customer base. They must offer higher CD rates to convince someone to move money away from a familiar bank. A bank like Marcus or Ally cannot rely on convenience — rate is the main reason a customer would choose them. This creates a natural gap: BofA's rates will almost always be lower than what you find online.

Regional banks fall somewhere in between. They compete on rate more aggressively than BofA but less than pure online banks. A regional bank in your state might offer a rate higher than BofA but lower than a national online competitor.

What the Federal Reserve's interest rate decisions mean for CD rates

When the Federal Reserve raises or lowers its benchmark interest rate, all banks adjust their CD rates in response. However, the timing and the size of the adjustment vary. Banks with excess deposits move slowly to raise rates because they do not need the money. Banks competing for deposits move faster.

In a rising-rate environment, BofA will eventually raise its CD rates, but it will lag behind online competitors by weeks or months. In a falling-rate environment, BofA may cut its rates faster than competitors because it is less concerned about losing deposits. The bank's size gives it the luxury of moving at its own pace.

The Fed's current rate environment matters to your decision. If rates are expected to fall, locking in a longer-term CD now makes sense even if the rate is not spectacular. If rates are expected to rise, a shorter term at BofA might be worth reconsidering in favor of a longer-term CD elsewhere.

Comparing Bank of America CD rates to what other banks offer

Bank of America's CD rates typically fall in the bottom third of available options for any given term. A one-year CD at BofA might pay 4.00 percent, while an online bank offers 4.75 percent for the same term. Over one year on a $10,000 CD, that difference amounts to $75 in lost interest.

The gap widens on longer terms. A five-year CD at BofA might pay 3.75 percent while a competitor offers 4.50 percent. On $10,000, that is $375 in lost interest over five years — not enormous, but real money.

The trade-off is convenience and integration. If you keep your checking account at BofA, managing a CD at the same bank means one login, one statement, and easier transfers. That convenience has a cost: lower interest. You have to decide whether the ease is worth the lower return.

What happens when your Bank of America CD matures

When a CD reaches its maturity date, BofA will automatically renew it at the current rate unless you tell the bank otherwise. This is where many customers lose money without realizing it. The renewal rate is often lower than the rate you just earned, and it is almost certainly lower than what competitors are offering.

You have a window of time — usually 10 days — after maturity to withdraw the money or move it without penalty. After that window closes, the CD renews automatically. If you do not check your account around the maturity date, you may miss the chance to shop around.

The best practice is to set a calendar reminder for one week before maturity, then compare BofA's renewal rate to what online banks are offering. If a competitor is offering significantly more, you can withdraw the money and move it. The transfer takes a few days, but there is no cost and no penalty.

Why Bank of America customers stay despite low CD rates

Customers keep money at BofA even when rates are low for reasons that have nothing to do with the rate itself. A customer with a mortgage, a checking account, and a credit card at BofA may open a CD there straightforward because it is easier than managing accounts at multiple banks. The convenience is real, even if the cost is measurable.

Some customers also value the physical branch network. If you need to deposit cash or speak to someone in person, BofA's 4,000 branches are an advantage that online banks cannot match. That advantage is worth something, though it is worth less than it used to be as more people bank online.

For customers who are not rate-sensitive — people with small CD amounts or those who value simplicity over maximum return — the low rate may not matter enough to justify switching. The question is whether it matters to you.

How to decide whether to move your CD elsewhere

Start by calculating the actual dollar difference. Take your CD amount, multiply it by the rate difference, and multiply by the number of years. If the difference is less than $50 over the term, the hassle of moving may not be worth it. If it is $200 or more, it probably is.

Consider also how often you want to manage your money. If you prefer to set a CD and forget it, moving to an online bank means one more login to monitor. If you are comfortable with multiple accounts, the higher rate at an online bank is worth the extra step.

Check whether your online bank choice is FDIC-insured. All major online banks are, but confirm before you move money. Your CD is insured up to $250,000 per bank, so as long as you stay under that limit at any one institution, your money is protected.

Frequently Asked Questions

Is my money safe in a Bank of America CD even though the rate is low?

Yes. Bank of America is FDIC-insured, which means deposits up to $250,000 are protected by the federal government. The rate has nothing to do with safety. Your money is equally safe at BofA as it is at any other FDIC-insured bank, regardless of what interest rate you earn.

Can I move my CD to another bank before it matures without a penalty?

No. If you withdraw a CD before the maturity date, you will pay an early withdrawal penalty, usually equal to a few months of interest. You must wait until the CD matures to move the money without penalty. That is why setting a reminder for the maturity date matters.

Will Bank of America ever raise its CD rates to match competitors?

BofA will raise rates when the Federal Reserve raises rates, but it will likely remain below online competitors. The bank has no incentive to match higher rates because it does not need to compete for deposits. Expect BofA rates to stay in the lower range of the market.

What is the difference between a CD and a regular savings account at Bank of America?

A CD locks your money away for a set term in exchange for a higher interest rate. A savings account lets you withdraw anytime but pays a much lower rate. BofA's savings account rates are even lower than its CD rates, so a CD is the better choice if you can commit to not touching the money.

How long does it take to move money from a Bank of America CD to another bank?

Once your CD matures and you withdraw the money, transferring it to another bank takes one to three business days through an electronic transfer. You can also withdraw cash and deposit it elsewhere, though that is slower and less find. Plan for at least a few days if you want the money to land at a new bank before rates change.