Navigating the world of banking, especially understanding how much to keep in a savings account, can feel like a labyrinth. Don't worry, you're not alone! Many people wonder about the optimal balance to strike between avoiding fees, earning interest, and having readily available funds. This comprehensive guide will walk you through everything you need to know about keeping money in a Bank of America savings account.
Let's dive in and demystify this together!
Understanding Bank of America Advantage Savings: The Core Account
Bank of America primarily offers one type of standard savings account: the Bank of America Advantage Savings account. While it's a straightforward product, understanding its nuances is key to managing your money effectively and avoiding unnecessary fees.
Step 1: Unraveling the Monthly Maintenance Fee - The First Hurdle
The most pressing question for many is the monthly maintenance fee. Bank of America charges an $8 monthly maintenance fee for the Advantage Savings account. However, there are several ways to waive this fee, which is crucial for maximizing your savings.
Sub-heading: How to Sidestep the $8 Monthly Fee
You can avoid the monthly maintenance fee by meeting one of the following requirements during each statement cycle:
- Maintain a minimum daily balance of $500 or more: This is often the most common and simplest way for many people to avoid the fee. It means that on any given day of your statement cycle, your balance should not dip below $500.
- Link your Advantage Savings account to an eligible Bank of America checking account: If you have certain Bank of America checking accounts (like Advantage Relationship Banking®, Advantage® with Tiered Interest Checking, or Advantage® Regular Checking Accounts), you can link up to four savings accounts to them to waive the fee. This is a great option if you already bank with BofA for your checking needs.
- Be enrolled in the Preferred Rewards program: If you're a Preferred Rewards member (Gold, Platinum, Platinum Honors, or Diamond Honors tiers), the monthly maintenance fee is waived. This program is for clients who maintain substantial combined balances across their Bank of America and Merrill investment accounts.
- Gold Tier: Requires $20,000 - $49,999 in combined balances.
- Platinum Tier: Requires $50,000 - $99,999 in combined balances.
- Platinum Honors Tier: Requires $100,000 - $999,999 in combined balances.
- Diamond Honors Tier: Waives fees for an unlimited number of savings accounts.
- An account owner is under the age of 25: This is a fantastic benefit for students and young adults. If you're under 25, the monthly fee is automatically waived.
Step 2: Deciphering Interest Rates - Don't Expect High Returns
Let's be upfront: Bank of America Advantage Savings accounts are not known for high interest rates. In fact, their standard Annual Percentage Yield (APY) is quite low.
Sub-heading: Understanding the APY and Preferred Rewards Boost
- Standard APY: For balances less than $2,500, and even for $2,500 and over, the standard APY is 0.01%. This means you'll earn very little interest on your savings.
- Preferred Rewards Tier Boost: While still modest compared to high-yield savings accounts elsewhere, Preferred Rewards members do see a slight increase in their APY:
- Gold Tier: 0.02% APY
- Platinum Tier: 0.03% APY
- Platinum Honors Tier: 0.04% APY
The takeaway here is clear: if your primary goal is to grow your savings significantly through interest earnings, a Bank of America Advantage Savings account might not be your best bet unless you have substantial balances qualifying for Preferred Rewards, and even then, other institutions offer much higher yields.
Step 3: Considering Minimum Opening Deposit - Getting Started
To open a Bank of America Advantage Savings account, there is a minimum opening deposit of $100. This is a relatively standard requirement for most savings accounts.
Step 4: Navigating Withdrawal Limits - Rule of 6
Savings accounts, by federal regulation (Regulation D), historically had a limit of six "convenient" withdrawals or transfers per statement cycle. While Regulation D was suspended, many banks, including Bank of America, still apply similar limits to their savings accounts.
Sub-heading: Understanding Access and Potential Fees
- Convenient Withdrawals: This typically includes transfers to other accounts, online transfers, pre-authorized transfers, and withdrawals by check or debit card.
- Excessive Withdrawal Fees: If you exceed the allowed number of convenient withdrawals, Bank of America may charge a fee for each additional transaction. It's crucial to check the most current Personal Schedule of Fees for the exact amount, but historically this has been around $10 per excess transaction.
- Unlimited In-Person or ATM Withdrawals: Generally, in-person withdrawals at a branch and ATM withdrawals are not subject to these limits. However, your ATM card may have its own daily withdrawal limits.
This means your Bank of America savings account is best for funds you don't need to access frequently. For everyday spending or frequent transfers, a checking account is more appropriate.
Step 5: Strategic Savings Practices - How Much Should You Keep?
Now that we've covered the mechanics, let's address the core question: how much do you need to keep in your Bank of America savings account? This depends entirely on your financial goals and circumstances.
Sub-heading: Different Financial Scenarios, Different Balances
- For Fee Avoidance Only: If your primary goal is simply to avoid the $8 monthly fee, then maintaining a minimum daily balance of $500 is all you need. Any amount above this is a bonus.
- For Emergency Funds: Financial experts often recommend having 3-6 months' worth of essential living expenses in an emergency fund. This money should be readily accessible but separate from your everyday spending. If Bank of America is where you keep your emergency fund, ensure it meets the $500 minimum to avoid fees. However, given the low APY, you might consider a high-yield savings account elsewhere for this purpose once you've met BofA's minimum.
- For Short-Term Savings Goals (e.g., down payment, vacation): For specific goals you'll reach within a year or two, you'll want to save as much as possible towards that goal. Again, ensure your balance stays above $500 to avoid fees.
- For Long-Term Savings and Investment: For goals many years away (retirement, child's education), a traditional savings account like Bank of America's is generally not the ideal place due to the extremely low interest rates. You'll want to explore investment vehicles like Certificates of Deposit (CDs), Money Market Accounts (MMAs), or investment accounts (like those offered by Merrill, which is part of Bank of America, and can help you qualify for Preferred Rewards).
- For Youth Accounts (Under 25): If you're under 25, the fee is waived regardless of your balance. This offers great flexibility for younger savers to start building healthy financial habits without the pressure of maintaining a minimum balance. A good starting point for a youth account could be as low as $25 (the minimum to open some related accounts) and then building up from there.
Step 6: Utilizing Bank of America's Tools - Making Savings Easier
Bank of America offers several features that can help you manage your savings, regardless of the amount you keep.
Sub-heading: Smart Ways to Grow Your Balance
- Automatic Transfers: Set up recurring transfers from your checking account to your savings account. Even small, regular transfers can add up over time.
- Direct Deposit Allocation: If you receive direct deposit from your employer, you can often set it up to automatically deposit a portion of your paycheck directly into your savings account. This is a set-it-and-forget-it method for consistent savings.
- Keep the Change® Program: Enroll your Bank of America debit card, and every purchase you make will be rounded up to the nearest dollar, with the difference transferred from your checking to your enrolled savings account. This is a painless way to accumulate small amounts.
- Online and Mobile Banking: Use the Bank of America app and online banking to easily monitor your balance, set up alerts, and manage your transfers. Staying informed about your account activity is key.
Related FAQ Questions
How to avoid Bank of America savings account fees?
You can avoid the $8 monthly fee by maintaining a minimum daily balance of $500, linking your savings to an eligible Bank of America checking account, being enrolled in the Preferred Rewards program, or being under 25 years old.
How to open a Bank of America savings account?
You can open a Bank of America Advantage Savings account online by visiting their website or by scheduling an appointment and visiting a financial center. You'll typically need to provide personal identification and your Social Security number.
How to transfer money to a Bank of America savings account?
You can transfer money to your Bank of America savings account through online banking, the mobile app, direct deposit from your employer, or by making a deposit at an ATM or financial center.
How to withdraw money from a Bank of America savings account?
You can withdraw money from your Bank of America savings account at an ATM, by visiting a financial center, or through online transfers to a linked checking account. Keep in mind potential limits on "convenient" withdrawals per statement cycle.
How to check my Bank of America savings account balance?
You can check your Bank of America savings account balance through online banking, the mobile app, at a Bank of America ATM, by calling customer service, or by reviewing your monthly statements.
How to get a higher interest rate on my Bank of America savings?
Generally, Bank of America Advantage Savings accounts offer very low interest rates. The only way to get a slightly higher rate is by being a Preferred Rewards member and maintaining higher combined balances across your Bank of America and Merrill accounts. For significantly higher interest, consider high-yield savings accounts at other financial institutions.
How to link a Bank of America savings account to checking?
You can link your eligible Bank of America savings account to a checking account by contacting customer service or visiting a financial center and requesting the accounts be linked for fee waiver purposes.
How to close a Bank of America savings account?
You can close a Bank of America savings account by calling customer service or by visiting a financial center. Ensure your balance is zero before requesting closure to avoid any complications.
How to manage Bank of America savings account alerts?
You can set up various alerts for your Bank of America savings account (e.g., low balance, large transactions) through online banking or the mobile app. This helps you stay informed about your account activity.
How to use Bank of America's Keep the Change program?
Enroll your Bank of America debit card in the Keep the Change program through online banking or the mobile app. Once enrolled, your debit card purchases will automatically be rounded up to the nearest dollar, and the difference will be transferred from your checking to your linked Advantage Savings account.
