What Bank of America charges for CDs

Bank of America does not charge a monthly maintenance fee on certificates of deposit. However, the bank does charge an early withdrawal penalty if you take your money out before the CD matures, and that penalty varies based on the CD's term length.

For CDs with terms of one year or less, Bank of America charges a penalty equal to the interest you would have earned over 90 days. For CDs with terms longer than one year, the penalty is the interest you would have earned over 180 days. This means a longer-term CD carries a steeper cost if you need the money early.

Bank of America also offers no-penalty CDs, which allow you to withdraw your money without a penalty after a short initial holding period (usually seven days). These CDs typically pay a lower interest rate than standard CDs to offset the bank's risk.

Key Takeaways

  • Bank of America charges no monthly fee to hold a CD, but does charge an early withdrawal penalty if you close it before maturity.
  • The early withdrawal penalty is 90 days of interest for CDs with one-year terms or shorter, and 180 days of interest for longer terms.
  • No-penalty CDs let you withdraw without a fee after a brief holding period, but pay lower interest rates than standard CDs.
  • The actual dollar amount of a penalty depends on how much you deposited and the interest rate on your specific CD.

How the early withdrawal penalty works in practice

The penalty is calculated based on the interest rate your CD earns, not a flat dollar amount. If you have a one-year CD earning 4.5% annual interest on a $10,000 deposit, the 90-day penalty would be roughly $112.50 (one-quarter of the annual interest). If you withdraw early, Bank of America subtracts that amount from your principal before returning the rest to you.

For a five-year CD with the same rate and deposit, the 180-day penalty would be roughly $225 (half the annual interest). The longer the CD term, the more interest you stand to lose if you need the money before maturity.

If your CD has not yet earned enough interest to cover the penalty, Bank of America will take the difference from your principal. This means you could receive less money back than you originally deposited if you withdraw very early.

When you might face the penalty

The early withdrawal penalty applies if you close the CD before its maturity date for any reason. This includes moving the money to another bank, transferring it to a different account type at Bank of America, or simply withdrawing cash.

The penalty does not apply once the CD reaches maturity. At that point, you can withdraw the full amount plus all earned interest without any cost. Bank of America will notify you before your CD matures, typically giving you a grace period (usually 10 days) to decide whether to withdraw the money or renew the CD.

If you do nothing during the grace period, Bank of America will automatically renew your CD into a new term at the current rate. You can avoid this by withdrawing or transferring the funds before the renewal date.

No-penalty CDs as an alternative

Bank of America's no-penalty CDs eliminate the early withdrawal cost but come with a trade-off: they pay less interest than standard CDs. The holding period is usually seven days, meaning you cannot withdraw without penalty during that week, but after that you can access your money anytime without losing interest.

No-penalty CDs make sense if you are uncertain about when you will need the money or want flexibility without the risk of a large penalty. They are less useful if you are confident you can leave the money untouched for the full CD term, since the lower rate means you earn less overall.

Other costs to know about

Bank of America does not charge a fee to open a CD or to maintain one while it is active. There are no annual fees, no inactivity fees, and no fees for automatic renewal.

If you have a Bank of America checking or savings account linked to your CD, you may face overdraft fees or other account charges, but those are separate from the CD itself. The CD account operates independently and does not incur its own fees beyond the early withdrawal penalty.

How CD rates compare to other Bank of America products

Bank of America's CD rates change based on market conditions and the term length you choose. Shorter-term CDs (three months to one year) typically pay less than longer-term CDs (two to five years), though this relationship can shift depending on economic conditions.

Bank of America's savings accounts and money market accounts usually pay lower interest rates than CDs with the same term. The trade-off is that savings accounts have no maturity date and no penalty for withdrawal, giving you more flexibility at the cost of lower earnings.

Before opening a CD, compare the rate Bank of America is offering to rates at other banks. Online banks and credit unions sometimes offer higher rates on CDs with the same term, which can add up to meaningful extra earnings over time.

Steps to avoid the early withdrawal penalty

The simplest way to avoid the penalty is to leave your money in the CD until it matures. Mark the maturity date on your calendar and plan to make a decision about the funds before the grace period ends.

If you think you might need the money before maturity, consider opening a no-penalty CD instead, even if the rate is lower. The difference in interest may be smaller than the early withdrawal penalty would be.

If you already have a standard CD and circumstances change, contact Bank of America before withdrawing to confirm the exact penalty amount. Some situations (such as the death of the account holder) may have different rules, and it is worth asking before you proceed.

Frequently Asked Questions

Can Bank of America waive the early withdrawal penalty?

Bank of America does not automatically waive early withdrawal penalties, but you can contact the bank and ask. In rare cases involving hardship or error, the bank may make an exception, but there is no may provide. It never hurts to call and explain your situation before you withdraw.

What happens if I need the money during the grace period after maturity?

Once your CD reaches maturity, you enter a grace period (usually 10 days) during which you can withdraw or transfer the money without any penalty. If you do nothing during that window, the CD automatically renews and the penalty terms start over for the new term.

Do I pay taxes on the interest I lose to the early withdrawal penalty?

No. You only pay taxes on interest you actually earn and keep. The interest that goes toward the penalty is not taxable income because you never received it.

Is the no-penalty CD worth it if rates are much lower?

It depends on how confident you are about keeping the money untouched. If there is a real chance you will need it early, the no-penalty CD protects you from a larger loss. If you are certain you can wait, the standard CD's higher rate usually wins out.

What if I move my CD to another bank before maturity?

Moving a CD to another bank counts as an early withdrawal from Bank of America's perspective, so you will owe the early withdrawal penalty. The new bank will not charge you to receive the funds, but Bank of America will deduct the penalty before sending the money over.