bank rates

Why We Warn Against Bad Bank CD Rates

The great majority of Bank of America's CD rates are below average, and its specials are the only exceptions.In the comment section for last week’s City National Bank post, a reader asked why I waste my time writing about big banks with poor CD rates.

I thought a lot about his comment as I prepared to write this big bank review on Bank of America, which hasn’t exactly endeared itself to customers lately.

It’s not only my job to report on rates, it’s also my responsibility to let savers know where the best CD rates are, and where they aren’t.

Here at Bankaholic, we know that people continue to invest money at big banks when they could be earning more elsewhere.

That makes us sad.

I’ve watched the rate on Bank of America’s 12-month “featured CD” drop again and again. It’s now down to 0.50% APY with a $10,000 minimum deposit to those who invest online.

(The rate if you walk into one of Bank of America’s 5,900 branches is 0.35% APY with a $1,000 minimum deposit.)

The online rate does beat the average annual rate offered by large banks and thrifts for 12-month CDs, which is a record low 0.37%.

But it’s less than half of what you can earn from the top nationally available 12-month CD on our CD Rates Leaderboard.

The current 12-month leader there, Doral Bank Direct, pays 1.15% with a $1,000 minimum deposit.

Bank of America’s short-term CD rates featured online squeak past average into mediocre territory, but the long-term rates aren’t worth your time or savings:

3-month CD rates are 0.28% APY vs. an average rate of 0.15% APY. (Leaderboard rate is 0.90% APY.)

6-month CD rates are 0.30% APY vs. an average rate of 0.23% APY. (Leaderboard rate is 0.99% APY.)

24-month CD rates are 0.40% APY vs. an average rate of 0.55% APY. (Leaderboard rate is 1.33% APY.)

36-month CD rates are 0.60% APY vs. an average rate of 0.72% APY. (Leaderboard rate is 1.65% APY.)

60-month CD rates are 1.21% APY vs. an average rate of 1.22% APY. (Leaderboard rate is 2.20% APY.)

As with any big bank, check with your branch to find out the exact CD rates for your geographic area.

The Bank of America website automatically features rates for Virginia, since that’s the state it uses to open CDs for savers who live in a state without a banking center.

There are definitely better deals out there, and you’ll find them if you compare Bank of America’s returns with the best CD rates from scores of other banks in our extensive database.

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Comments (2)
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2 Existing Comments
  1. SeniorSaver said:
    on October 8th at 11:42 am

    Speaking of bad rates, check out what MetLife Bank (which is in the process of trying to sell itself) did last week. While keeping a 1.00% APY 12-month CD rate, it lowered the rate on all longer-term CDs to just 0.75%. I’m sure this is what the mega-banks, like Citi and BofA, have been doing for some time now.This looks like banks trying to shrink their deposit bases, not just interest costs. If I’m right, it really bodes ill for future economic growth. I wonder if Bernanke realizes that the more he cuts rates, the less attracted banks are to lending money to businesses and individuals. I’m sure he doesn’t have a clue.

  2. David said:
    on October 9th at 11:11 pm

    As far as BofA goes…..those most Americans live within the media induced bounds of total amnesia and complete fabrication…it just so happens that my memory goes back further then the last 15 minutes. And I remember that BofA was bought out by NationsBank. Who are probably among the nastiest people on the planet both in terms of Customer Service and how they treat their own employees. So I’m not exactly lamenting this wolf in sheep’s clothing and all the bad press they have received lately.
    As to interest rates, I go back to an earlier proposal I made to your readers. That everybody send Ben (Three Years of Failed Policies) Bernanke a tube of KY Jelly. So every time he inserts his head into some Wall Street bankers orifice it goes in smoothly