What Bank of America's high yield savings account is
Bank of America offers a Money Market Savings Account, which is their version of a high yield savings product. It's a savings account where the interest rate moves up and down based on what the Federal Reserve does with its benchmark rate. When rates are higher, you earn more on your balance. When rates drop, so does what you make.
The account is FDIC insured up to $250,000, meaning your money is protected if the bank fails. You can withdraw money whenever you need it—there's no lock-in period or penalty for taking your cash out. The tradeoff is that the interest rate Bank of America pays is typically lower than what online-only banks offer, because Bank of America has physical branches and higher operating costs.
This is different from a regular savings account at Bank of America, which pays almost nothing. It's also different from a Certificate of Deposit (CD), where you agree to leave money untouched for a set time in exchange for a may provide rate.
Key Takeaways
- Bank of America's Money Market Savings Account earns interest that changes when Federal Reserve rates change, so your rate is not locked in.
- You can withdraw money at any time without penalty, making it different from CDs or money market funds that restrict access.
- The interest rate Bank of America pays is usually lower than online banks because you have access to branches and customer service.
- Your deposits are FDIC insured up to $250,000, so your principal is protected even if the bank fails.
- You need a Bank of America checking or savings account to open one, and minimum balance requirements vary by account tier.
How the interest rate works
Bank of America's rate on the Money Market Savings Account is variable, meaning it is not fixed for a year or any other period. The bank sets the rate based on what the Federal Reserve's benchmark rate is at any given time. When the Fed raises rates, Bank of America typically raises what it pays within weeks or months. When the Fed cuts rates, Bank of America cuts what it pays to you.
The actual rate you earn depends on your account balance tier. Bank of America groups customers into tiers based on how much money they have across all their accounts at the bank. Higher balances earn higher rates. The bank publishes these rates on its website, but they change frequently—sometimes weekly. You should check the current rate before opening the account if the rate matters to your decision.
Interest is compounded daily and deposited monthly into your account. That means you earn interest on your interest, though the effect is small unless your balance is large or rates stay high for a long time.
Minimum balance and fees
Bank of America requires a minimum opening deposit of $25 to start a Money Market Savings Account. However, the account has a minimum balance requirement to earn the advertised rate—typically $2,500 or more, depending on your account tier and current promotions. If your balance drops below the minimum, the rate you earn may drop significantly or the account may convert to a regular savings account.
There is no monthly maintenance fee on the Money Market Savings Account itself. However, if you fall below the minimum balance, you may be charged a fee or moved to a lower-rate tier. Bank of America also charges fees if you exceed a certain number of withdrawals in a month—federal rules limit savings account withdrawals to six per month, and Bank of America may charge $10 per excess withdrawal.
If you maintain the minimum balance and stay within the withdrawal limit, your only cost is the opportunity cost: you're earning less interest than you would at an online bank, in exchange for the convenience of Bank of America's branches and customer service.
How to open and manage the account
You must already have a Bank of America checking or savings account to open a Money Market Savings Account. You cannot open one as your first account with the bank. If you don't have an account yet, you'll need to open a checking account first, either online or at a branch.
Once you have a Bank of America account, you can open a Money Market Savings Account online through your Bank of America login, by phone at 1-800-432-1000, or in person at any branch. You'll choose how much to deposit initially (at least $25), and the account will be active within one business day. You can then transfer money into it from your checking account or link it to an external bank account.
You manage the account through Bank of America's online banking portal or mobile app. You can see your current balance, interest earned, and the current rate. You can transfer money out to your checking account or to an external bank account, though external transfers may take one to three business days.
When a Money Market Savings Account makes sense
This account works well if you already bank with Bank of America and want a place to park money that earns more than a regular savings account. It's useful for an emergency fund that you might need to access quickly, since there's no withdrawal penalty and you can get your money within one business day.
It also makes sense if you value the ability to walk into a branch and talk to someone, or if you want all your accounts in one place for simplicity. Some people use it as a holding tank while they decide what to do with a bonus or tax refund.
The account does not make sense if you're trying to maximize interest earnings. Online banks like Marcus, Ally, and American Express offer rates that are often 0.5% to 1% higher than Bank of America, which compounds to real money over time. On a $10,000 balance, a 1% difference means $100 per year. If you don't need branch access, an online bank will pay you more.
Comparing Bank of America to other options
| Account Type | Interest Rate | Minimum Balance | Withdrawal Restrictions | FDIC Insured |
|---|---|---|---|---|
| Bank of America Money Market Savings | Variable, typically 0.01% to 0.05% | $2,500 (varies by tier) | 6 per month; excess fees apply | Yes, up to $250,000 |
| Online Bank High Yield Savings (e.g., Marcus, Ally) | Variable, typically 4% to 5% | $0 to $25,000 | 6 per month; no excess fees | Yes, up to $250,000 |
| Bank of America Regular Savings | Variable, typically 0.01% | $0 | 6 per month; excess fees apply | Yes, up to $250,000 |
| Bank of America Certificate of Deposit (CD) | Fixed, typically 4% to 5% | $1,000 | None until maturity; early withdrawal penalty | Yes, up to $250,000 |
The Money Market Savings Account sits between a regular savings account (which pays almost nothing) and an online high yield savings account (which pays much more). If you want flexibility and don't mind earning less, Bank of America's option works. If you want the highest rate and don't need branch access, an online bank is the better choice. If you know you won't touch the money for six months or longer, a CD locks in a higher rate.
What happens to your money if rates drop
When the Federal Reserve cuts interest rates, Bank of America will cut the rate it pays on your Money Market Savings Account. This happens automatically—you don't have to do anything. Your balance stays the same, but the interest you earn each month will be smaller.
This is why the account is called "variable rate." You're not protected against rate cuts the way you would be with a CD, where the rate is locked in for the full term. The upside is that when rates rise, you benefit immediately. The downside is that when rates fall, so does your earnings.
If rates drop so low that the account no longer makes sense to you, you can move your money to a different bank or account type. There's no penalty for closing the account or transferring your balance elsewhere.
Frequently Asked Questions
Can I have multiple Money Market Savings Accounts at Bank of America?
Yes, you can open more than one, though there's usually no reason to. Each account is separately FDIC insured up to $250,000, so if you have more than $250,000 to save, opening a second account protects the excess. Otherwise, one account is simpler to manage.
What's the difference between Bank of America's Money Market Savings Account and a money market fund?
A Money Market Savings Account is a bank account that's FDIC insured and lets you withdraw money anytime. A money market fund is an investment product sold by brokerages that's not FDIC insured and may have restrictions on withdrawals. Bank of America's product is the savings account, not the fund.
Do I have to keep a minimum balance at all times?
You need to maintain the minimum balance to earn the advertised rate. If your balance drops below it, the rate you earn may drop or the account may convert to a regular savings account. You won't lose your money, but you'll earn less interest.
Can I set up automatic transfers into the Money Market Savings Account?
Yes. You can set up automatic transfers from your Bank of America checking account to move money into the Money Market Savings Account on a schedule you choose—weekly, biweekly, or monthly. This is useful if you want to build savings automatically.
What happens if Bank of America goes out of business?
Your deposits are protected by FDIC insurance up to $250,000. If Bank of America fails, the FDIC will transfer your account to another bank or pay you directly. You won't lose your money, though there may be a brief delay while the transfer happens.