Bank of America has raised interest rates across several core financial products, delivering one of the most significant banking updates of 2025. The new rates, effective October 1, 2025, bring higher returns for savers while slightly increasing borrowing costs nationwide. The move follows shifting economic conditions, ongoing inflation pressures, and recent changes in federal benchmark rates.
These adjustments impact savings accounts, certificates of deposit (CDs), money market accounts, and a range of loan products—making it essential for customers to understand how the new structure affects their finances.
Why Bank of America Increased Rates
Bank of America’s decision is closely tied to national monetary policy and the economic climate:
1. Alignment With Federal Reserve Policy
In mid-September, the Federal Reserve raised the federal funds rate by 25 basis points, prompting several major banks—including BoA—to adjust their deposit and lending rates to reflect the new benchmark.
2. Encouraging Consumer Savings
With households navigating uncertain markets, BoA raised savings yields to promote stronger financial habits and cushion customers against inflation.
3. Strengthening Liquidity
Higher deposit rates help the bank maintain liquidity, improve balance-sheet resilience, and manage internal capital flow more efficiently.
4. Protecting Depositor Value
Despite improving inflation trends, price levels remain above the Fed’s 2% target. The bank increased returns to ensure savers do not lose long-term value on deposits.
New Bank of America Rates (Effective October 1, 2025)
| Account Type | Previous Rate | New Rate | Change |
|---|---|---|---|
| Basic Savings Account | 0.03% | 0.10% | +0.07% |
| Advantage Savings | 0.05% | 0.20% | +0.15% |
| 6-Month CD | 4.35% | 4.65% | +0.30% |
| 1-Year CD | 4.60% | 5.00% | +0.40% |
| 2-Year CD | 4.80% | 5.10% | +0.30% |
| Money Market Account | 0.20% | 0.40% | +0.20% |
| Preferred Rewards Tier | Up to 4.60% | Up to 5.25% | Variable |
These changes position BoA among the highest-yielding traditional banks in the U.S., especially for long-term CD holders and Preferred Rewards clients.
3 Key Customer Impacts
1. Higher Savings Earnings
Customers with standard or Advantage Savings accounts will now earn notably more annual interest. Even modest balances see meaningful improvements when compounded across the year.
2. Bigger Returns on CDs
CD investors benefit the most. The 1-year CD now pays 5%, offering one of the strongest yields from a major U.S. bank since before the 2008 financial crisis.
3. Slight Increases in Lending Costs
New mortgage, auto loan, and personal loan applicants can expect rates to rise by 0.25%–0.40%, depending on credit profile and loan type. Existing fixed-rate loan holders remain unaffected.
Example: New Savings Payout Comparison
| Account Type | Deposit | Old Annual Payout | New Annual Payout | Difference |
|---|---|---|---|---|
| Basic Savings | $5,000 | $1.50 | $5.00 | +$3.50 |
| Advantage Savings | $10,000 | $5.00 | $20.00 | +$15.00 |
| 6-Month CD | $25,000 | $543.75 | $581.25 | +$37.50 |
| 1-Year CD | $50,000 | $2,300 | $2,500 | +$200 |
| 2-Year CD | $100,000 | $4,800 | $5,100 | +$300 |
These increases underscore BoA’s strategy of rewarding savers while keeping borrowing options accessible.
Loan Rate Adjustments (2025)
| Loan Type | Old Avg Rate | New Avg Rate | Change |
|---|---|---|---|
| 30-Year Mortgage | 6.38% | 6.65% | +0.27% |
| 15-Year Mortgage | 5.90% | 6.20% | +0.30% |
| Auto Loan (5-Year) | 7.09% | 7.35% | +0.26% |
| Personal Loan | 10.75% | 11.00% | +0.25% |
| HELOC | 8.60% | 8.85% | +0.25% |
Economic Context
The bank’s rate update follows improved inflation trends, now near 2.7%, and ongoing efforts to stabilize consumer markets post-pandemic. Analysts say the shift encourages customers to rethink their financial planning and consider high-yield savings tools available through major banks like Bank of America.
Long-Term Outlook
Experts expect moderate interest levels through 2026 unless inflation or recession risks trigger new monetary policies. BoA’s proactive changes position the bank to retain depositors, maintain competitiveness, and support long-term economic stability.
