Setting up a savings account is a crucial step toward financial well-being, and understanding the nuances of how much to keep in it can make a significant difference. If you're considering a Bank of America savings account, you're in the right place! This comprehensive guide will walk you through everything you need to know, from avoiding fees to maximizing any potential benefits.
Step 1: Let's start with a quick self-assessment!
Before we dive into the nitty-gritty of Bank of America's specific policies, let's reflect on your personal financial situation. This will help you tailor the information to your unique needs.
- What are your primary savings goals? (e.g., emergency fund, down payment for a house, vacation, retirement)
- How much liquid cash do you typically need access to for your everyday expenses?
- Do you have an existing checking account with Bank of America, or are you considering opening one?
- Are you comfortable with online-only banking, or do you prefer access to physical branches?
Thinking about these questions will help you determine the ideal balance for your Bank of America savings account.
Step 2: Understanding Bank of America Advantage Savings Accounts
Bank of America primarily offers the Bank of America Advantage Savings account. While it serves as a basic savings vehicle, it's important to be aware of its structure and potential fees.
Sub-heading: The Monthly Maintenance Fee
The Bank of America Advantage Savings account typically comes with an $8 monthly maintenance fee. However, there are several ways to avoid this fee, which is crucial for making the most of your savings.
Step 3: Strategies to Avoid the Monthly Maintenance Fee
Nobody wants to pay unnecessary fees, especially on a savings account! Here's a step-by-step guide to keeping that $8 in your pocket:
Sub-heading: Option A: Maintain a Minimum Daily Balance
The most straightforward way to avoid the monthly fee is to maintain a minimum daily balance of $500 or more in your Bank of America Advantage Savings account. This means that for every day of your statement cycle, your balance must not dip below $500.
- Actionable Tip: If you're building your savings, aim to consistently keep at least $500 in this account. Set up automatic transfers from your checking account to ensure you meet this threshold.
Sub-heading: Option B: Link to an Eligible Bank of America Checking Account
If you have an eligible Bank of America checking account, you can often link your Advantage Savings account to it to waive the fee. This is a common strategy for customers who primarily bank with Bank of America.
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Eligible Checking Accounts typically include:
- Bank of America Advantage Relationship Banking
- Bank of America Advantage with Tiered Interest Checking
- Bank of America Advantage Regular Checking
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Actionable Tip: If you already have one of these checking accounts, contact Bank of America to inquire about linking your savings account. If not, consider if opening one aligns with your overall banking needs.
Sub-heading: Option C: Be Under Age 25
Bank of America offers a perk for younger account holders: if you are under the age of 25, the monthly maintenance fee for the Advantage Savings account is waived. This is a great benefit for students and young adults getting started with saving.
- Actionable Tip: If you qualify, take advantage of this waiver! It allows you to save without worrying about the monthly fee.
Sub-heading: Option D: Become a Preferred Rewards Member
This is a more advanced strategy, but it offers significant benefits beyond just fee waivers. The Bank of America Preferred Rewards program offers various tiers (Gold, Platinum, Platinum Honors, Diamond, Diamond Honors) based on your combined balances across eligible Bank of America deposit accounts and Merrill investment accounts.
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Preferred Rewards Tiers and Requirements (as of June 2025):
- Gold: $20,000 - < $50,000 (3-month combined average daily balance)
- Platinum: $50,000 - < $100,000 (3-month combined average daily balance)
- Platinum Honors: $100,000 - < $1,000,000 (3-month combined average daily balance)
- Diamond/Diamond Honors: Higher tiers with even greater benefits.
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Benefits for Preferred Rewards Members (including fee waivers):
- No monthly maintenance fees on up to 4 eligible checking and 4 savings accounts (including Advantage Savings).
- Interest rate booster on Advantage Savings accounts (e.g., 5% for Gold, 10% for Platinum, 20% for Platinum Honors – note: this is a booster on the already low base rate, so don't expect massive returns from interest alone).
- Credit card rewards bonuses.
- Discounts on auto loans, home equity, and mortgages.
- Priority customer service.
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Actionable Tip: If you have substantial assets and are consolidating your banking and investments, exploring the Preferred Rewards program can be highly beneficial. It's not just about the savings account fee, but a holistic set of perks.
Step 4: Considering the Purpose of Your Savings Account
Beyond avoiding fees, how much you keep in your Bank of America savings account should align with its purpose.
Sub-heading: Emergency Fund
A savings account is the ideal place for your emergency fund. This is money you'll need access to quickly in case of unexpected expenses like job loss, medical emergencies, or car repairs.
- Recommendation: Aim for 3 to 6 months of essential living expenses in your emergency fund. Some financial advisors suggest even more, up to 9-12 months, especially if you have an unstable income or dependents.
- Actionable Tip: Prioritize building this fund before focusing on other savings goals. It provides a crucial safety net.
Sub-heading: Short-Term Savings Goals
For goals you plan to achieve within the next 1-3 years (e.g., a down payment on a car, a large vacation, a new appliance), a savings account can work.
- Recommendation: Keep the amount needed for these goals readily accessible.
- Consideration: While a Bank of America savings account is liquid, its interest rates are typically very low (around 0.01% - 0.04% APY, even with Preferred Rewards boosters). For short-term goals where you want to earn a bit more, a high-yield online savings account might be a better option. These accounts often offer APYs in the 4-5% range, significantly outperforming traditional bank savings accounts.
Sub-heading: Long-Term Savings Goals
For goals beyond 3-5 years (e.g., retirement, college savings), a basic savings account is generally not the best place for your money due to its low interest rates. Inflation will erode the purchasing power of your savings over time.
- Recommendation: For long-term goals, consider investment vehicles like:
- IRAs (Individual Retirement Accounts): Tax-advantaged accounts for retirement.
- 401(k)s: Employer-sponsored retirement plans.
- Brokerage Accounts: For investing in stocks, bonds, mutual funds, and ETFs.
- Certificates of Deposit (CDs): Offer slightly higher fixed interest rates than savings accounts for a set period, but your money is locked up. Bank of America offers various CDs.
Step 5: What About the Minimum Opening Deposit?
To open a Bank of America Advantage Savings account, you'll generally need a minimum opening deposit of $100. This is separate from the $500 minimum daily balance required to waive the monthly fee after the first six months.
- Important Note: For new Bank of America Advantage Savings accounts, the monthly maintenance fee is typically waived for the first six months from account opening. This gives you a grace period to establish your balance or link an eligible account.
Step 6: Automating Your Savings
Once you've decided how much you want to keep in your Bank of America savings account, automate your contributions!
- Set up recurring transfers: Most online banking platforms allow you to set up automatic transfers from your checking account to your savings account on a weekly, bi-weekly, or monthly basis. This "set it and forget it" approach is incredibly effective for consistent saving.
- "Keep the Change" program: Bank of America offers a "Keep the Change" program where they round up your debit card purchases to the nearest dollar and transfer the difference to your enrolled savings account. This is a small but effective way to build savings over time.
Step 7: Reviewing and Adjusting Your Strategy
Your financial situation can change, so it's essential to regularly review and adjust your savings strategy.
- Quarterly or Annually: Take a look at your savings account balance, your goals, and Bank of America's current fee structure and interest rates.
- Life Events: Major life events like a new job, marriage, or having children should prompt a review of your emergency fund and overall savings plan.
By following these steps, you can effectively manage your Bank of America savings account, avoid unnecessary fees, and make progress toward your financial goals.
10 Related FAQ Questions
How to avoid the Bank of America savings account monthly fee?
You can avoid the $8 monthly maintenance fee by maintaining a minimum daily balance of $500, linking to an eligible Bank of America checking account, being under age 25, or being a member of the Preferred Rewards program.
How to qualify for Bank of America Preferred Rewards?
To qualify for Preferred Rewards, you need an active, eligible Bank of America checking account and a three-month combined average daily balance of $20,000 or more across your eligible Bank of America deposit accounts and Merrill investment accounts.
How to increase the interest rate on a Bank of America savings account?
While Bank of America's base savings account interest rates are very low (around 0.01% APY), you can get a small "interest rate booster" on your Advantage Savings account if you are a member of the Preferred Rewards program. However, don't expect significant earnings from interest with this account.
How to transfer money to a Bank of America savings account?
You can transfer money to your Bank of America savings account via online banking, mobile banking (using features like Zelle or mobile check deposit), direct deposit from your employer, or by visiting a Bank of America ATM or financial center.
How to check the balance of my Bank of America savings account?
You can check your balance through Bank of America's online banking website, the Bank of America mobile app, by calling their customer service line, or by using a Bank of America ATM.
How to open a Bank of America savings account?
You can open a Bank of America Advantage Savings account online on their website, or by visiting a local Bank of America financial center. You'll typically need a minimum opening deposit of $100.
How to set up automatic transfers to my Bank of America savings account?
You can set up automatic transfers from your Bank of America checking account to your savings account through their online banking portal or mobile app. Look for options like "Transfers" or "Set up recurring transfers."
How to close a Bank of America savings account?
You can close a Bank of America savings account by visiting a financial center, calling their customer service, or sometimes through online banking depending on the account status. It's advisable to zero out the balance before attempting to close to avoid any issues.
How to manage my Bank of America savings account online?
Bank of America's online and mobile banking platforms allow you to view your balance and transaction history, set up alerts, manage transfers, deposit checks, and find ATMs and financial centers.
How to determine the best amount for my emergency fund?
The best amount for your emergency fund typically ranges from 3 to 6 months of your essential living expenses. This includes rent/mortgage, utilities, food, transportation, and insurance. Some experts recommend even more depending on your job security and dependents.