What a Bank of America Certificate of Deposit Is

A Certificate of Deposit (CD) at Bank of America is a savings account where you agree to leave money untouched for a set period — typically three months to five years — in exchange for a fixed interest rate. Bank of America pays you that rate regardless of whether their other rates go up or down during your CD term. When the term ends, you get your original deposit back plus the interest earned.

The trade-off is straightforward: you lock up your money, and Bank of America pays you more interest than they would on a regular savings account. If you withdraw the money before the term ends, you pay an early withdrawal penalty that reduces your earnings or eats into your principal.

CDs are FDIC insured up to $250,000 per depositor per bank, which means your money is protected even if Bank of America fails. This makes them one of the safest places to park cash you won't need immediately.

Key Takeaways

  • Bank of America CDs lock your money for a fixed term in exchange for a may provide interest rate that does not change.
  • Early withdrawal penalties vary by CD term length and can wipe out most or all of your interest earnings.
  • You can open a CD online, by phone, or in person, and you need only a Bank of America account or the ability to open one.
  • CD rates at Bank of America are typically lower than rates at online banks or credit unions, so comparing options before you commit matters.
  • Your CD is FDIC insured up to $250,000, protecting your principal and interest if the bank fails.

How Bank of America CD Rates and Terms Work

Bank of America offers CDs in several term lengths, most commonly three months, six months, one year, two years, three years, and five years. The longer the term, the higher the interest rate — this is how banks compensate you for tying up your money longer. A five-year CD will pay more than a one-year CD opened on the same day.

The rate you receive is fixed, meaning it will not change for the entire term, even if Bank of America raises or lowers rates for new CDs. Interest is typically compounded daily and credited monthly or at maturity, depending on the CD type. You can choose to have interest paid to your Bank of America account or reinvested into the CD.

Bank of America's CD rates change frequently and are generally lower than rates offered by online banks or credit unions. Before opening a CD, check what Bank of America is currently offering and compare it to competitors — the difference in rate can add up significantly over a multi-year term.

Early Withdrawal Penalties and What They Cost

If you withdraw money from your Bank of America CD before the term ends, you pay an early withdrawal penalty. The penalty amount depends on the CD term: shorter-term CDs (three to six months) typically have smaller penalties, while longer-term CDs (three to five years) have larger ones. Bank of America's penalties are usually measured in months of interest — for example, a penalty might be three months of interest on a one-year CD or six months of interest on a five-year CD.

The penalty is deducted from your interest earnings first. If you withdraw early and the penalty exceeds the interest you've earned, the bank takes the difference from your principal. This means you can end up with less money than you deposited. Before opening a CD, read the disclosure document to see the exact penalty for the term you're considering.

If you think you might need the money before the term ends, a shorter-term CD or a regular savings account is a better choice. Some banks offer no-penalty CDs with lower rates, which let you withdraw without penalty — Bank of America does not currently offer this product, but other institutions do.

How to Open a Bank of America CD

You can open a Bank of America CD online through their website, by calling 1-800-432-1000, or by visiting a local branch. If you already have a Bank of America account, the process takes minutes online. If you don't have an account, you'll need to open one first, which requires an initial deposit, a valid ID, and a Social Security number.

When you open a CD, you'll choose the term length and decide whether to have interest paid monthly or at maturity. You'll also decide what happens when the CD matures — Bank of America will either renew it automatically for another term at the current rate, or transfer the money to your linked checking or savings account. Read the renewal terms carefully; many people miss the window to make a different choice and end up locked in for another term.

You can open multiple CDs at Bank of America, and each one is separately insured up to $250,000. Some people use this strategy to ladder CDs — opening several with different maturity dates so that money becomes available at different times without paying early withdrawal penalties.

FDIC Insurance and How Your Money Is Protected

Bank of America is an FDIC-insured bank, which means deposits are protected by the Federal Deposit Insurance Corporation. Your CD principal and accrued interest are covered up to $250,000 per depositor per bank. If you have $250,000 in a CD and $250,000 in a savings account at Bank of America, both are fully protected because they are different account types.

If you want to protect more than $250,000 in CDs, you can open accounts at different banks — each bank's FDIC coverage is separate. You can also open a CD in your name alone and another in joint ownership with a spouse; these are insured separately. The FDIC website has a calculator that shows you exactly how much of your money is covered.

FDIC insurance does not protect you from market risk or interest-rate risk — it only protects you if the bank fails. Your CD rate is may provide, but if rates rise significantly during your term, you'll wish you had locked in a longer term or higher rate elsewhere.

Bank of America CDs Compared to Other Options

Bank of America's CD rates are typically lower than those offered by online banks like Marcus, Ally, or American Express, and sometimes lower than credit unions. This is partly because Bank of America has physical branches and higher operating costs. If you shop around, you may find a CD paying 0.5% to 1% more annually at another institution — over a five-year term, that difference compounds into real money.

However, Bank of America CDs make sense if you value convenience (you can visit a branch or call a familiar number), if you want to keep all your accounts in one place, or if you have a large balance that qualifies for relationship discounts. Some Bank of America customers also earn higher CD rates through their Preferred Rewards program if they maintain a high account balance or have a mortgage with the bank.

If you're choosing between a Bank of America CD and a regular savings account, the CD wins if you won't need the money during the term — the higher rate is worth the lock-up. If you might need the money, a high-yield savings account at an online bank offers better rates than Bank of America savings accounts and lets you withdraw anytime without penalty.

What Happens When Your CD Matures

When your CD term ends, Bank of America enters a grace period — usually seven to ten calendar days — during which you can withdraw the money or move it without penalty. If you do nothing during this window, the bank automatically renews the CD for another term at the current rate. Many people miss this window and end up locked in for another term they didn't intend.

To avoid automatic renewal, contact Bank of America before your maturity date and tell them what you want to do: withdraw the money, move it to another account, or roll it into a new CD with different terms. You can make this request online, by phone, or in person. Write down the maturity date on your calendar or set a phone reminder a week before it arrives.

If you're using CDs as part of a savings ladder — opening multiple CDs with staggered maturity dates — track each one separately so you know when money becomes available. A spreadsheet with the maturity date, rate, and amount for each CD helps you stay organized and make intentional decisions about what to do with the money when it matures.

Frequently Asked Questions

Can I add money to a Bank of America CD after I open it?

No. CDs are fixed-amount accounts — you deposit a lump sum at the start, and that amount stays the same until maturity. You cannot add money to an existing CD. If you want to invest more, you must open a separate CD.

What if I need my money before the CD matures?

You can withdraw it, but you'll pay an early withdrawal penalty that reduces your earnings or principal. The penalty amount depends on the CD term. Before opening a CD, confirm the exact penalty amount in the disclosure document so you know the cost if an emergency happens.

Do I have to pay taxes on CD interest?

Yes. CD interest is taxable income in the year it is earned or credited, even if you don't withdraw it. Bank of America will send you a 1099-INT form at tax time showing the interest you earned. If you're in a high tax bracket, this is one reason some people prefer CDs to regular savings accounts — the higher rate helps offset the tax impact.

Can I open a CD if I don't have a Bank of America account?

Yes, but you'll need to open a checking or savings account first. You can do this online or in a branch. You'll need a valid ID, Social Security number, and an initial deposit to open the account. Once the account is open, you can immediately open a CD.

Are Bank of America CDs a good investment right now?

That depends on current rates and your alternatives. Bank of America's rates are typically lower than online banks, so compare before you commit. If rates are rising, a shorter-term CD lets you reinvest at a higher rate sooner. If rates are falling, a longer-term CD locks in the current rate. Check current rates at multiple banks to make an informed choice.