Is Bank of America one of the best online banks?

This Bank of America review, dives into Bank of America’s checking accounts, savings accounts, money market accounts,  cd accounts, and IRAs. If you do not want a lot of details, you can skip to the summary to find out if Bank of America qualifies as one of the best online banks, or if their rates can compete enough to make them a winner in the arena of online banking.

History of Bank of America

Bank of America came into being with the merger of Nations Bank and BankAmerica Corp in 1998. Since then, they have acquired FleetBoston Financial Corp, MBNA, US Trust, Countrywide Financial and Merrill Lynch. These acquisitions made it possible for Bank of America to branch into new financial areas of services. With MBNA, they became the largest credit card issuer in the country. With FleetBoston Financial Corp, they added scale to private banking and significantly advanced their capabilities to serve ultra high net worth clients. Many people thought the acquisition of failing Countrywide Financial was a mistake; however, Bank of America was able to launch home loans through this acquisition. Finally, with the foresight to save Merrill Lynch, they created a premier financial services franchise which opened the door for wealth management, investment banking and international capabilities. A slogan at Bank of America is: “We listen to our customers and provide what they need.” As a leader in the multi cultural market, Bank of America has been named one of the 50 Best Companies for Minorities by Fortune magazine.

Bank of America Corporation (NYSE: BAC) is headquartered in Charlotte, N.C. As of December 31, 2009, they operate in all 50 states, the District of Columbia and more than 40 foreign countries. Their banking and various non banking subsidiaries throughout the United States, and in selected international markets, provide a diversified range of financial services and products. Bank of America does this through six business segments: Deposits, Global Card Services, Home Loans and Insurance, Global Banking, Global markets and Global Wealth & Investment Management. Bank of America is a part of the Down Jones Industrial Average. Bank of America is now offering online banking services but are they one of the best? Hopefully, this review of Bank of America will help you to decide. The deposit accounts and checking accounts that will be investigated in this review of Bank of America are all FDIC insured.

Bank of America Checking

All Bank of America checking accounts include: Online Banking with Bill Pay, Keep the Change®, Bank of America Visa® Debit Card, and access to over 18,000 ATMs. MyAccess® Checking account includes a monthly maintenance fee waiver if opened online and includes no minimum balance requirements. With the Keep the Change^® program added to MyAccess® Checking, Bank of America will match your keep the change savings amounts at 5% per year. Bank of America will even start out matching 100% for the first three months after you enroll, with a maximum bonus of $250 per year. This account is a good choice for those who are looking for perks and incentives to help motivate them to save more money.

An Advantage with Tiered Interest Checking account allows you to earn interest on your checking account’s balance and will also set you up to receive almost every banking service for free or at special rates. Free services include: Online banking service with Bill Pay®, Visa® Debit Card with Total Security Protection® and Photo Security®. Bank of America’s interest bearing checking account has no fee for cashier’s checks, money orders or ATM statements. Manage your money online with Bank of America online banking services, by phone, or by using Bank of America ATMs. Other features are unlimited check writing with free deluxe checks and free enrollment in Keep the Change®. You can earn up to 20% cash back each time you use your debit card through Add It Up®, and Trade stocks online for as little as $0 with Merrill Edge. The monthly fee on this account is $25, but that may be waived if you keep a minimum of $10,000 in the account. Remember this is a tiered interest earning account and so the higher the daily balance the higher your APY rate.

Small Business Checking Bundle account

This is an interest bearing account which offers two options. One is a Business Economy Checking account and the other is a Personal e-Banking account. The Business Economy Checking account offers no charge for the first 150 checks paid or deposited items combined per month. There is no monthly maintenance fee when you have a qualified debit card purchase each month or minimum balance is maintained. A free Visa^® Debit Card and check safekeeping service help avoid the cost of including paid checks in your statement.

Bank of America Savings & CDs

A Bank of America Gross Money Market Savings account has a $10 monthly maintenance fee. You may have this fee waived, if you maintain a minimum balance of $5,000 or more in the account, or link it with an Advantage with Tiered Interest Checking account. Reading between the lines, the fee waiver applies only to the first two linked money market accounts. Interest for this account is compounded daily and credited monthly at a variable rate. Notice is given on their website that rates may change at any time without prior notice. The highest money market account rate is achieved by keeping $500,000 or more in the account. You may earn a bonus interest rate by either having an automatic transfer of $250 from your Bank of America checking account, automatic transfer of the monthly interest from your Bank of America cd account, or simply by direct depositing $250 or more per statement cycle. As long as one of these events occurs each month, you will continue to receive an interest rate bonus. Once again, the caveat “may change the interest rate bonus” at their discretion and at any time without notice. This is a money market account not a high yield savings account or a high interest CD account so the rate is variable. If you are unsure of the differences in these deposit accounts please read Bank Truth’s articles that cover the pros and cons of these different bank accounts.

Bank of America has a plethora of CD accounts.

Standard Term CD

You may search for the one that fits you by term or by deposit amount. Terms start from a 1 month cd to a 120 month cd. Deposit amounts go from $1K to more than $500K. The amount you deposit does not affect the APY rate. The terms have tiered APYrates; the longer the term, the better the rate. Interest is compounded and credited monthly and interest can be withdrawn monthly without penalty. Be aware that the APY rate quoted assumes that you leave your earned interest on deposit the full length of the term. Standard term CDs will automatically renew. On the website www.bankofamerica.com, you can compare the top five cd terms within Bank of America’s CDs, which is very convenient.

• High Yield CD

This account features a $10,000 minimum deposit to open. Locked APY for period of 12 months

• Risk Free CD

This account gives the ability to access funds prior to maturity date without penalties. Minimum of $5,000 needed with a 9 month term. May invest up to $1,000,000 in one or more Risk Free CD^® accounts

• Opt-Up^® CD

This account lets you take advantage of rising interest rates. Invest $10,000 up to $250,000 for a period of 18 months and you get the option to increase your interest rate once after the first six months with no fee or term extension. This is commonly known as a bump up option.

Fees and Penalties for Bank of America CDs

CD penalties for early withdrawal are imposed at a graduated rate depending upon the length of term. I had a difficult time finding the specifics on their home cite. On the Bank of America website, you can select personal schedule of fees which lists no specifics just the general “if you do not complete your term you will be assessed a penalty” type statements. The personal schedule of fees refers you to the deposit agreement and disclosures page which again, has no specifics and refers you back to the personal schedule of fees. Bank of America does have an online chat link which proved very helpful so, if all else fails you do have that option.

IRAs

IRAs are very easy to set up with the Merrill Edge division of Bank of America. Whether you intend to open, roll over or change from traditional to Roth IRA, Bank of America has a step by step process. You can do this online, by phone, or you can download the necessary information in order to fax it in. All you need is your contact information, identity information, employment information, and existing account information (if transferring funds). Your online banking ID is not required to open an account but will allow you to pro-populate much of the application and make the process easier.

Summary of Bank of America Review

Bank of America is one of the most diverse banks in America today. Combining several of their products, the savvy investor can do well. With a personal checking account in conjunction with the Keep the Change^®, for example, one may earn more than just interest. As for the savings accounts and CD accounts, one might want to look a little deeper. The CD rates at Bank of America lie above the national average; however, let’s not get too excited since they fall far below the top ten rates offered. This is why in good conscience we cannot use the term best CD rates when we are talking about Bank of America certificates of deposit. If you are looking for the best cd rates please see Bank Truth’s reviews of popular online cd accounts. The money market account rates, offered by Bank of America, fall far below the national average. My recommendation would be that unless you are already a well established customer of Bank of America (and love them), you will find much better rates of return for money market accounts through other online banks. To find the best money market rates you can read Bank Truth’s posts on various money market accounts.

It appears that Bank of America tries to make up for its low APY rates by offering lots of programs and incentives. If you are just starting to build your savings, these programs can be of great benefit to you; however, if you already have high deposits, there are lots of other online banks that offer a much better return on your deposited funds. In this instance, it really does pay to look at bank reviews to compare rates and services. If reading reviews seem tedious, you can peruse Bank Truth’s  banking videos on several online banks. Granted, rates are not the only thing to consider when looking for the best fit between you and your banking institution of choice, but they are a big part of the decision. Quite frankly, Bank of America’s rates of return are not high enough to make them the best choice for online investors.

Bank of America Review, 1.8 out of 5 based on 19 ratings