Savings account interest rates are finally rising for the first time in years, making them a solid option for safely growing your money. Why are rates rising? Theto try to cool runaway , which is indirectly driving up interest rates on financial accounts like credit cards, loans and mortgages, as well as .
Some banks are now offering annual percentage yields as high as 1%, making it a more attractive time to park your money in a savings account. (APY is the compounding interest rate you earn on your savings.) The higher the APY, the more you'll earn in interest over time. Though APYs have been low for the last couple of years,. But other large banks haven't moved an inch... yet.
Bank of America continues to offer relatively low APYs, even if you have tens of thousands of dollars in a savings account. However, if getting a higher interest rate is not as important as having nationwide access to physical branches or bringing all your finances under one roof, Bank of America might make sense for you.
Read on for more information about Bank of America's savings account, what APY you can earn and how it compares to other banks.
Bank of America savings account options
Bank of America has just one savings account: Advantage Savings. The base APY is 0.01%, but if you're eligible and enroll for the Preferred Rewards program, you can earn up to 0.04%.
The Preferred Rewards tiers are: Advantage Savings Gold tier, Advantage Savings Platinum tier and Advantage Savings Platinum Honors tier. The only difference among them is the amount of APY you can earn.
Bank of America savings account options, compared
|Account name||APY||Minimum deposit to open the account||Monthly service fee*||Balance required|
|Advantage Savings, Gold||0.02%||$100||$0||$20,000 to $50,000**|
|Advantage Savings, Platinum Tier||0.03%||$100||$0||$50,000 to $100,000**|
|Advantage Savings, Platinum Honors||0.04%||$100||$0||$100,000 to $1 million**|
*Fees are waivable.
**Three-month combined average daily balance in Bank of America deposit accounts and/or Merrill investment accounts.
Note: Rates as of July 25, 2022. APYs vary by region, and Bank of America's savings account may not be available everywhere. You'll need toon Bank of America's website to see your options.
Bank of America Advantage Savings
Advantage Savings is Bank of America's standard savings account. You earn 0.01% APY (well below the national average APY for savings accounts) and interest compounding monthly. You can open this account with an initial deposit of $100. You'll be charged an $8 monthly maintenance fee, unless you meet one of Bank of America's, such as maintaining a minimum balance of $500 or linking to Bank of America Advantage Relationship Banking®.
For any new account opened, though, Bank of America will waive the fee for the first six months.
Preferred Rewards Bank of America Advantage Savings
If you maintain a higher balance, you may be eligible for Preferred Rewards membership, which can earn a higher APY on the money in your Advantage Savings account.
To get approved for a higher APY account, you'll need a Bank of America checking account and a a three-month combined daily average in any of your your Bank of America deposit accounts (i.e., checkings and savings) and/or a Merrill investment account.
Here's how much APY you can earn and money you'll need for each of the upper-tier accounts:
- Gold: 0.02% APY; $20,000 to $50,0000
- Platinum: 0.03% APY; $50,000 to $100,000
- Platinum Honors: 0.04% APY; $100,000 to $1 million
As a Preferred Rewards client, you don't have to pay the $8 monthly fee.
Enrolling in the Preferred Rewards higher tiers isn't automatic. Once you reach $20,000 in assets, Erica, Bank of America's AI-driven financial assistant, will nudge you to enroll in the Preferred Rewards program to get the benefits. Once you enroll, you'll be automatically bumped into the higher tiers as your assets reach the additional thresholds, according to a Bank of America spokesperson.
If you've got a lot of assets stored at Bank of America and/or Merrill investment accounts, Advantage Savings might make sense for you -- but you'll still be earning relatively low APY compared to the national average and competitors offering over 1% APY.
How Bank of America's APYs compare to other banks
While other brick-and-mortar banks likeand Wells Fargo also have monthly fees and similarly low APYs, their standard savings accounts tout some benefits over Bank of America's. For example, both have cheaper monthly fees -- $5 instead of $8 -- and the option to waive the fee with just $300 in your savings account -- $200 less than what Bank of America requires.
|Account name||APY||First year earnings on $5,000|
|Bank of America Advantage Savings||0.01%||$0.50|
|Chase Premier Savings||0.02%||$1.00|
Opening a standard savings account with Chase and Wells Fargo is also more accessible than Bank of America. Chase doesn't require a minimum deposit for a savings account, and Wells Fargo requires just $25 for its base savings account -- four times less than what Bank of America requires.
Parking your savings in an online bank may make sense if you want to earn more in interest. Online banks can offer high APYs, because they don't have physical locations to manage, reducing their overhead costs, which they then pass on to customers in the form of reduced fees and higher interest rates.
That noted, there are some banks you can visit in-person that offer high APYs and no account fees, including Capital One's 360 Performance Savings, which offers a robust 1.00% APY.
For more banks offering higher savings account rates, check out our picks for the.
What's the current situation on savings interest rates?
Savings account interest rates have been extraordinarily low in recent years. However, savings account rates are beginning to rise. When the Fed raises the federal funds rate -- as it has several times this year already -- it increases the interest rate banks charge each other for borrowing and lending money. To offset the costs, banks increase interest rates on consumer accounts, like credit cards and loans, which makes it more expensive for customers to borrow money. Savings account rates also go up, attracting new customers who want to get higher interest on their savings.
What's the average savings account interest rate?
For most of early 2022, the average savings account interest rate in the US was 0.06%. Since then, it's been ticking up, slowly, reaching 0.07% in May and 0.08% in June. Many banks with physical branches, which historically have lower savings account rates than online-only banks, have started increasing APY rates for savings accounts.
Which banks offer the highest savings interest rates?
Interest rates have fluctuated widely throughout June in response to the rapidly evolving economic situation in the US. That said, as of July 25, 2022, here are some banks offering high APYs.
SoFi, an online-only bank, offers savings accounts with an APY as high as 1.50%. Physical banks are jumping in, too, such as Capital One and Citibank, which have high-yield savings accounts with APYs up to 1.20% and 1.40%, respectively. Capital One's 360 Performance Savings account doesn't include a fee, but Citibank's Accelerate Savings account does, at $4.50 per month.
What are high interest alternatives to savings accounts?
I bonds -- secure government-backed investments sold directly to the public -- offer a considerably more appealing interest rate of 9.62%. This is a good option if you won't need access to your funds for five years. You can't draw on your funds for the first year at all, and if you withdraw before the five year holding period is up, you'll face a three month interest penalty for withdrawing early. After five years, you can take out the money from your I bond without penalty.
A certificate of deposit is another high interest alternative to savings accounts. A CD is similar to a savings account, but it's a one time investment rather than an account you continue pouring money into. With a CD, you make one lump-sum deposit at a fixed interest rate for a specified period, which could range from a month all the way up to 10 years. Since CD APYs are directly tied to the federal funds rate, CD interest rates are currently rising, reaching over 3% at some banks.
How often can you withdraw money from a Bank of America savings account?
You can withdraw from Advantage Savings six times per month without penalty. After six withdrawals, Bank of America charges you $10. You can incur this additional withdrawal fee six times, for a total penalty of $60. You can waive this fee if you:
- Are under the age of 18
- Qualify as a student
- Maintain a minimum daily balance of $20,000 or more
- Are enrolled in the Preferred Rewards program
This withdrawal limit used to be the standard in the US due to a Federal Reserve rule called Regulation D. In April 2020, the Fed eliminated this rule to allow consumers unfettered access to their savings throughout the pandemic. As a result, some banks have eliminated the withdrawal limit, or increased the number of withdrawals before charging you.
Bank of America's $10 fee for up to six extra withdrawals is expensive compared to Chase, which charges $5 per extra withdrawal only up to three times (that's $60 max versus $15 max)
Do all savings accounts have monthly fees?
Brick-and-mortar banks like Bank of America, Chase and Wells Fargo typically charge a monthly fee for a savings account. Monthly fees are usually waived if you maintain a set minimum balance. If you can't satisfy that requirement, consider a savings account without monthly fees such as Capital One's 360 Savings account.
Monthly fees can severely cut into your savings. For example, if you save $496 with Bank of America in your first year, you'll earn just three cents in interest by the end of the year, all while paying a total of $96 in monthly fees. Bank of America's monthly fee is higher than Chase and Wells Fargo, which costs $5 per month.
All rates are current as of July 25, 2022.
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