Are CD Rates at Bank of America Unattractive?
Saving money is a key part of financial planning. One of the most popular options for saving is a certificate of deposit (CD). A CD is a type of deposit account that offers a fixed rate of return over a predetermined period of time. CDs are often used by savers who want to lock in a certain rate of return over the life of the CD. Unfortunately, CD rates at Bank of America are underwhelming compared with rates available from competing banks.
The nationwide average APY for a 1-year CD of $5,000 is about 0.50%. Bank of America offers a rate of 0.15% on a 1-year CD, which is significantly lower than the national average. This rate is even more unattractive when compared with other banks. Wells Fargo, for instance, offers a rate of 0.50% on a 1-year CD, which is more than double Bank of America’s rate.
Putting your money into a high-yield savings account or CD is one way to get a better interest rate on your savings. For those who can take the risk, investing in the stock market may be the best way to get a higher return.
In addition to the lower rates, Bank of America also charges a $25 fee for early withdrawals from the CD. This fee is significantly higher than other banks, which typically charge a $10 or less fee for early withdrawals.
In addition to the lower interest rate, Bank of America also imposes other restrictions on its CDs. For instance, the bank requires a minimum deposit of $500 for a CD. This is significantly higher than other banks, which generally require only a $100 minimum deposit.
Moreover, Bank of America does not offer any special promotions on CDs. Other banks often offer promotions such as bonus interest rate or special offers for specific terms.
In fact, Citibank is the only one of the five largest banks in the United States that offers a better rate than Bank of America. Citibank CD rates vary by term, but the best Citibank CD rates are usually much higher than Bank of America’s.
In addition to overdraft fees, the bank “applied other incorrect fees and charges,” according to a 2017 Consumer Financial Protection Bureau (CFPB) report. Banks and credit unions surveyed include: Alliant Credit Union, Ally Bank, America First Credit Union, American Express National Bank, Axos Bank, Bank of America, Bank of the West, Capital One, Chase, Citibank, Citizens Bank, Discover, Fifth Third Bank, First National Bank of Omaha, Huntington Bank, JPMorgan Chase, Key Bank, M&T Bank, Navy Federal Credit Union, PNC, Regions Bank, Santander Bank, SunTrust Bank, TD Bank, U.S. Bank, USAA, Wells Fargo, and Zions Bank.
Overall, Bank of America CD rates are relatively unattractive compared with other banks. If you’re looking for a higher rate of return on your savings, you may want to consider other options. A flat-rate card like Bank of America® Unlimited Cash Rewards credit card can help with the process. Not only can you earn 1.5 percent cash back on all purchases, you can also take advantage of the bank’s “Pay It” feature, which allows you to pay off your balance quickly and avoid paying interest. For instance, the Alaska Airlines Visa Signature® credit card from Bank of America offers a $99 companion fare each year on your account anniversary.
If you’re looking to save for a long-term goal, such as a retirement or a child’s college education, you may want to consider investing in mutual funds or exchange-traded funds (ETFs). investing in mutual funds or ETFs can help you grow your money over time.
If you’re looking for short-term savings, however, CDs may still be the best option. Just be sure to shop around to find the best rates.
