Bank of America customers holding cash in a standard savings account are earning 0.01% APY — the same rate the bank has offered for years, even as the Federal Reserve spent much of 2022 and 2023 pushing benchmark rates to their highest levels in two decades.
On a $10,000 balance, that works out to roughly one dollar per year.
Meanwhile, a growing list of online banks and money market funds are paying north of 4% APY on the same money.
The gap between what big banks pay and what the rest of the market pays has become one of the widest on record.
Bank of America and its peers are sitting on enormous piles of deposits — trillions of dollars combined — collected when rates were near zero.
There's little pressure to pay up for money they already have.
The bank's own disclosures show its deposit costs remain far below what competitors chasing new customers are willing to offer.
Customers have been moving cash out of traditional accounts at a steady clip, hunting for yield in high-yield savings accounts, certificates of deposit, and Treasury bills.
Bank of America's deposit balances have slipped in recent quarters, a trend that shows up across the industry.
For the average household, the stakes are real.
A family with $20,000 parked in a big-bank savings account earning 0.01% collects about $2 a year.
The same $20,000 in a 4.25% high-yield savings account would generate roughly $850 annually — money that could cover a month of groceries or a utility bill.
Most online banks let you open an account in minutes with no minimum balance and no monthly fee.
Transfers between banks typically take one to three business days.
The main trade-off is losing the branch network and the familiarity of an app you already know.
High-yield rates are variable and will fall if the Fed cuts its benchmark rate — which many economists expect over the coming year.
Some promotional rates come with balance caps or require a minimum number of debit card transactions per month.
And any account paying dramatically more than the market average deserves a second look at the fine print.
There's also a middle path: keep your checking account and direct deposit where they are, and move only your emergency fund or long-term savings to a higher-yield account.
That preserves convenience while capturing most of the difference.
The bigger lesson here isn't about one bank.
It's that loyalty to a single institution rarely pays.
Rates change, fees change, and the best deal today may not be the best deal in six months.
A quick annual check of what your cash is earning — and what it could be earning — is one of the highest-return habits in personal finance.
The gap between 0.01% and 4% isn't a rounding error.
Final Thoughts
It's the difference between your money working for you and your money working for your bank.