Bank of America has quietly kicked off one of 2025’s most important banking changes. From 1 October 2025, the bank rolled out a new set of interest rates that reshape how much customers earn on savings and how much they pay on loans.
With inflation cooling but still above the Federal Reserve’s 2% goal, the bank has adjusted pricing across savings accounts, certificates of deposit (CDs), money market accounts and key lending products. The move is designed to make saving more rewarding while keeping lending competitive in a tighter-rate environment.
Customers can review official product information any time on the Bank of America website.
Why Bank of America Raised Rates Again
Several forces sit behind this latest Bank of America rate hike:
- Aligning with Federal Reserve policy
In mid-September 2025, the Federal Reserve lifted the federal funds rate by 25 basis points, keeping pressure on banks to recalibrate both deposit and lending rates in order to maintain stable margins and support monetary policy. - Rewarding savers after a high-inflation period
After years of elevated prices, higher Bank of America interest rates 2025 are intended to rebuild the purchasing power of deposits and encourage households to rebuild cash buffers. - Managing liquidity and funding costs
By paying more on deposits and CDs, the bank strengthens its funding base, which supports lending growth and day-to-day liquidity management. - Balancing inflation and growth
Inflation is lower than last year but still not back at target. Slightly higher savings yields help protect the real value of cash without pushing borrowing costs sharply higher.
New Bank of America Interest Rates From 1 October 2025
From 1 October 2025, Bank of America rolled out new annual interest rates across key deposit products:
- Basic Savings Account
- Old rate: 0.03%
- New rate: 0.10%
- Change: +0.07 percentage points
- Advantage Savings
- Old rate: 0.05%
- New rate: 0.20%
- Change: +0.15 percentage points
- 6-Month CD
- Old rate: 4.35%
- New rate: 4.65%
- 1-Year CD
- Old rate: 4.60%
- New rate: 5.00%
- 2-Year CD
- Old rate: 4.80%
- New rate: 5.10%
- Money Market Account
- Old rate: 0.20%
- New rate: 0.40%
- Preferred Rewards tiered accounts
- Previously: up to 4.60%
- Now: up to 5.25%, depending on balance and relationship level
These changes make longer-tenor CDs and Preferred Rewards accounts especially attractive for customers looking for low-risk, predictable income.
How The New Rates Help Savers
1. Stronger earnings on everyday savings
Customers who keep cash in savings accounts or money market accounts will notice higher interest credits over the year.
For example, an Advantage Savings customer with a 10,000 dollar balance:
- Old annual interest at 0.05%: 5 dollars
- New annual interest at 0.20%: 20 dollars
That is four times the previous payout, even before compounding.
2. CD investors are the big winners
The focus of this Bank of America rate hike is clearly on CD rates:
- A 1-year CD at 5.00% is now one of the most compelling yields from a major US bank in well over a decade.
- A 2-year CD at 5.10% helps savers lock in a strong rate for a longer period if they do not need immediate liquidity.
Short-term investors can use 6- or 12-month CDs for flexibility, while longer-term savers can ladder 1- and 2-year CDs to keep money maturing regularly at attractive rates.
3. Preferred Rewards boosts the top end
Under the Preferred Rewards umbrella, eligible customers get extra yield on top of the standard Bank of America interest rates:
- Relationship bonuses of roughly 0.10% to 0.35% can be added to certain deposit products.
- This can push effective yields for high-balance households towards the top of the 5% range in select tiers.
For customers already holding sizeable checking, savings or investment balances with the bank, this program now has even more value.
Real-World Example: How Much More Can You Earn?
Here is how the new rates translate into approximate annual interest for different deposit amounts:
- Basic Savings – 5,000 dollars
- Old payout: about 1.50 dollars
- New payout: about 5.00 dollars
- Extra earned: 3.50 dollars
- Advantage Savings – 10,000 dollars
- Old payout: 5 dollars
- New payout: 20 dollars
- Extra earned: 15 dollars
- 6-Month CD – 25,000 dollars
- Old annualised return: around 543.75 dollars
- New annualised return: around 581.25 dollars
- Extra: 37.50 dollars
- 1-Year CD – 50,000 dollars
- Old interest: 2,300 dollars
- New interest: 2,500 dollars
- Extra: 200 dollars
- 2-Year CD – 100,000 dollars
- Old interest: 4,800 dollars
- New interest: 5,100 dollars
- Extra: 300 dollars
For households trying to stay ahead of inflation, these higher CD rates are a meaningful upgrade.
What Changes For Borrowers?
Rate rises rarely benefit both sides equally. While savers gain, new borrowers will see slightly higher costs across many credit products:
Approximate changes in headline rates:
- 30-year fixed mortgage
- From 6.38% to about 6.65%
- 15-year fixed mortgage
- From 5.90% to about 6.20%
- 5-year auto loan
- From 7.09% to about 7.35%
- Personal loan
- From 10.75% to about 11.00%
- HELOC (home equity line of credit)
- From 8.60% to about 8.85%
Key points for borrowers:
- Existing fixed-rate loans are locked in and do not change.
- New borrowers and those on variable-rate products are most exposed.
- Anyone thinking about refinancing may want to compare current offers quickly, especially if the Federal Reserve continues to keep policy rates elevated.
Economic Backdrop: Inflation, Fed Policy And Banks
The Federal Reserve has spent several years raising rates to cool inflation that surged after the pandemic. With inflation now lower but not yet fully under control, policymakers are trying to guide the economy toward a “soft landing” without triggering a deep downturn.
Banks like Bank of America respond by:
- Increasing deposit rates so customers keep more money in traditional accounts instead of moving everything to money market funds.
- Carefully adjusting loan rates so credit remains available, but borrowing does not overheat the economy.
- Managing margins so they can remain profitable while still paying more to savers.
This latest move fits into that pattern: better rewards for savers, modestly higher costs for borrowers and a more balanced flow of money through the banking system.
How Bank of America Stacks Up Against Other Major Banks
While exact competitor rates change frequently, the article’s comparison shows Bank of America now leading or matching many rivals on key deposit products:
- Its 1-year CD at about 5.00% edges out or rivals rates at Wells Fargo, Chase, Citibank and U.S. Bank in the same maturity bucket.
- The savings account rate of 0.20% and money market rate of 0.40% are higher than several other large banks that have been slower to raise yields.
For rate-sensitive customers who prefer to stay with a big, well-known institution, these Bank of America interest rates 2025 are more competitive than they have been in years.
Smart Moves For Customers Right Now
To get the most value from this Bank of America rate hike, customers can consider:
- Upgrading from Basic to Advantage Savings
If you hold a consistent balance, moving to Advantage Savings can significantly increase your yield compared with a basic savings account. - Locking in CD rates
With 1- and 2-year CD rates above 5%, now may be a good time to lock in some cash you do not need immediately. - Joining Preferred Rewards
If you qualify, the incremental boosts on savings and CDs can push your effective rate higher than standard offers. - Reviewing your loans
- Fixed-rate borrowers can stay put if their rate is below current levels.
- Variable-rate borrowers may want to explore refinancing options or faster repayments to reduce interest exposure.
Expert View: A Shift Toward Disciplined Saving
Economists note that this step by Bank of America reflects a broader shift in household finances:
- Families are rebalancing from heavy post-pandemic spending toward disciplined saving.
- Higher interest rates on deposits reward people who keep emergency funds and medium-term savings in the banking system.
- At the same time, slightly higher loan costs can discourage unnecessary or impulsive debt.
Taken together, the move is seen as a stabilising force for both households and the wider economy.
Frequently Asked Questions
1. When did the new Bank of America interest rates start?
The updated structure for savings accounts, CDs and related deposit products took effect on 1 October 2025.
2. What is the new rate for basic savings accounts?
Basic savings now pay 0.10% annually, up from 0.03%.
3. What are the latest Bank of America CD rates?
The key headline levels are about 4.65% for 6-month CDs, 5.00% for 1-year CDs and 5.10% for 2-year CDs, with potential bonuses for Preferred Rewards clients.
4. Have loan rates gone up too?
Yes. Mortgage, auto and personal loan rates have increased by roughly 0.25% to 0.40% for new borrowing, reflecting the higher-rate environment.
5. Who benefits the most from this rate hike?
Customers with larger savings balances, especially in Advantage Savings, CDs and Preferred Rewards accounts, gain the biggest boost from the new payout structure.
Bottom Line
The latest Bank of America rate hike is a clear signal: in 2025, saving pays more than it has in many years at one of the country’s largest banks. Savers willing to lock in CD rates or meet Preferred Rewards thresholds can capture especially attractive yields, while new borrowers should prepare for slightly higher monthly payments.
For anyone with money at Bank of America, this is the moment to log in, review every account and reshape your mix of savings, CDs and loans so your money is working as hard as possible in the new rate era.
