Does bank of America have a high-yield savings account?
Does Bank of America Have a High-Yield Savings Account? No, Bank of America does not offer a high-yield savings account. If you keep enough money on deposit with Bank of America ($20,000 or more), you may qualify for a higher-level interest rate tier, but even then, the rates are extremely low.
Bank of America pays next to nothing in interest -- the Bank of America Advantage Savings account currently earns a 0.01% standard APY. There are many high-yield savings accounts that earn 4%, 5%, or more.
The cons of high-yield savings accounts
Here are some of the negatives: Interest rates on high-yield savings accounts are variable and can fluctuate at any time, so while a bank may advertise a high annual percentage yield (APY) when you apply, it likely won't last forever.
Safety: As noted, most high-yield savings accounts are either FDIC or NCUA insured for up to $250,000. Moreover, as deposit accounts, they're not susceptible to the ebbs and flows of the market, so there's little to no chance you'll lose the money you deposit into one.
As of writing, no U.S.-based banks are offering a 7.00% APY on a savings account. For high-yield savings accounts โ top, competitive rates are more in the 5.00% APY range.
Like high-yield savings accounts, CDs usually offer substantially higher annual percentage yields (APYs) than traditional savings accounts. As of October 2023, the average CD rates range from 4.60% to 5.55%, according to the Federal Deposit Insurance Corp. (FDIC).
APY | Minimum deposit requirement | |
---|---|---|
First Foundation Online Savings Account | 5.00% | $1,000 |
Salem Five Direct eOne Savings | 5.01% | $10 |
Synchrony Bank High Yield Savings | 4.75% | $0 |
Betterment Cash Reserve | 4.75% | $10 |
Pros and cons of a high-yield savings account
A high-yield savings account offers a higher rate of return on your money compared to standard savings accounts. But some of these accounts charge fees, have minimum balances requirements, and offer variable interest rates that can go up and down over time.
Stampf recommends keeping six to 12 months' worth of expenses in a high-yield savings account for easy access to cash in case of an emergency and saving for larger expenses that are are coming in the short term, like buying a home.
Not the best choice for long-term savings โ High-yield savings accounts offer much better interest rates than traditional savings accounts, but often, you won't earn enough over the long-term to account for inflation. Investments may be a better option for a longer-term, greater yield.
What is the interest rate for Bank of America savings accounts?
Account name | Interest rate | Minimum deposit |
---|---|---|
Advantage Savings | 0.01% | $100 |
Advantage Savings, Gold | 0.02% | $100 |
Advantage Savings, Platinum | 0.03% | $100 |
Advantage Savings, Platinum Honors | 0.04% | $100 |
While there aren't any financial institutions paying 7% on a CD right now, there are other banks that pay high CD rates. These accounts all offer at least 5% APY on deposits.
Bank | Term length | APY* |
---|---|---|
MYSB Direct | 12 months | 5.30% |
Signature Federal Credit Union | 3 months | 5.55% |
Department of Commerce Federal Credit Union | 12 months | 5.02% |
Ally Bank | 6 months | 5.05% |
4.25% APY: If you invest your $50,000 in a CD or high-yield savings account with a 4.25% interest rate, you will earn $2,125 in interest in one year. 4.5% APY: A 4.5% CD or high-yield savings account will yield $2,250 in interest on your $50,000 investment in one year.
Do I have to pay taxes on HYSA? Yes, you have to pay taxes on the interest earned from a savings account. If you earn more than $10 in interest on your savings account, the bank holding your account will send you a Form 1099-T to include in your tax return.
Winner: Wells Fargo
Wells Fargo makes it easier to waive monthly service fees than Chase or Bank of America. Its basic checking account also offers the largest bonus to those who qualify. You might prefer Chase if you qualify for a bonus on one of its higher-tier checking accounts, though.
Top Nationwide Rate (APY) | Total Earnings | |
---|---|---|
6 months | 5.76% | $ 288 |
1 year | 6.18% | $ 618 |
18 months | 5.80% | $ 887 |
2 year | 5.60% | $ 1,151 |
Similar to a high-yield savings account, CDs allow you to deposit money to earn interest on your balance. Sometimes, the interest you earn on a CD can even be higher than what you earn on a high-yield savings account. But with a CD you need to keep your money locked into the account for a specified amount of time.
0.46% APY | 5.30% APY | |
---|---|---|
After 1 Year | $46.00 | $530.00 |
After 5 Years | $232.13 | $2,946.19 |
After 10 Years | $469.64 | $6,760.37 |
The Short Answer: Yes. Share: The IRS probably already knows about many of your financial accounts, and the IRS can get information on how much is there. But, in reality, the IRS rarely digs deeper into your bank and financial accounts unless you're being audited or the IRS is collecting back taxes from you.
Why do big banks not offer high yield savings accounts?
Banks lose money when they pay out higher rates, so they keep them low in order to maximize their profits. Despite the largest increase in the federal funds rate in 20 years, banks have more money than they need, so they have continued to keep savings rates low.
At a 4.25% annual interest rate, your $100,000 deposit would earn a total of $4,250 in interest over the course of a year if interest compounds annually. Annual total: $104,250.
For an emergency fund, experts suggest saving at least three to six months' worth of living expenses. This includes essentials such as housing, utilities, food, health care and transportation. For example, if your average monthly expenses are $3,000, you'd want to save at least $9,000 to $18,000.
How much is too much cash in savings? An amount exceeding $250,000 could be considered too much cash to have in a savings account. That's because $250,000 is the limit for standard deposit insurance coverage per depositor, per FDIC-insured bank, per ownership category.
Having $20,000 in a savings account is a good starting point if you want to create a sizable emergency fund.
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