Bank of America is one of the world's largest financial institutions, serving individuals, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company services approximately 1,030,000 HSA accounts and custodies over $2.9 billion in assets.

The ideal investment HSA has no investment threshold, allowing the very first dollar you contribute to be invested. If you're using an HSA for investment purposes, seek an administrator that doesn’t hold your dollars hostage in a checking account earning little to no interest. 

Bank of America has established an investment threshold of $1,000. You must always have $1,000 in the HSA checking account. Any excess dollars over this amount can be transferred to the investment account.

Keeping funds in a low-interest cash account means accountholders miss out on those funds’ potential investment returns; this is known as opportunity cost. In a way this is a hidden fee because the opportunity to earn money on those dollars is lost. In Bank of America’s case, one could argue that investors are missing out on $60 of earnings, assuming a 6 percent rate of return on $1,000 held in the savings account which only yields $2. The aforementioned numbers are just for one year. Stretch that out to 10, 20, or 30 years and the potential earnings lost are in the thousands. Use the calculator below to estimate the potential earnings lost on univested cash.

Investment Account

When your HSA balance reaches $1,000, you’re eligible to start investing any portion of the balance above this level in select mutual funds. Bank of America offers account holders a well designed pre-selected investment lineup composed of 38 mutual funds. 45% (17) of the funds in the pre-selected lineup are from the Vanguard Group. The other fund families represented in the lineup are illustrated in the chart below.

The table below displays the number of funds offered for each asset class in the Bank of America investment lineup.

At the The HSA Report Card we are big proponents of passive index investing and thus rate highly administrators that offer low-cost index funds for each of the major asset classes. In the table above, you can see that index funds are available for every major asset class, save emerging markets.

How expensive are the funds in the Bank of America investment lineup?

As you can see in the chart below, Bank of America offers participants some reasonably priced funds when compared to the other 9 administrators with pre-selected investment lineups in our study.

Interest-Bearing Account

Bank of America offers participants an FDIC-insured, interest-bearing account. Interest bearing accounts make sense for participants who are uneasy about investing their HSA dollars in the equity markets. The interest rate available on different balances is as follows.

Fees

Condensed Schedule of Fees (Non-Employer Group)

In our study of the top investment HSAs, Bank of America ranks as one of the lowest cost providers. There are no transaction fees to buy or sell investments within the Bank of America HSA investment account, nor are there any fees to enroll in the investment account. Mutual funds do have internal expenses, which can be found in the prospectus, which is available on the investments website. Some mutual funds may also impose a short term redemption fee on the proceeds of the fund shares that are redeemed within a defined period of their purchase as defined in the prospectus.

In this section, we have a little fun projecting fees for each administrator. Our goal for this exercise was to find the lowest possible fees for each administrator. Keep in mind, we assumed the HSA was being used solely for investment purposes, therefore only certain fees applied. Given that every HSA is different, there is no perfect way to compare the top 10 administrators in our study. Nonetheless, we gave it a shot and believe there is value in presenting our findings.

In order to compare fees, we made a few simple assumptions:

• Every dollar above the investment threshold was invested.

• Current and future contributions were invested in a single fund.

  • Total Stock Market Index (VTI / VTSAX / SPTM / FZROX) or S&P 500 index (IVV / VIIIX / VFIAX/ WFSPX). We believe these two index funds are one in the same.

• No transaction fee (NTF) or commission-free ETF programs were utilized to buy the index funds.

• If these index funds were not available under the NTF and/or commission-free ETF programs, we turned to the open market and executed a single trade per calendar year in order to keep transaction costs down.

For Bank of America we made the following assumptions:

1. Every dollar was invested in iShares S&P 500 Fund Class K1 (expense ratio 0.03%) - WFSPX

2. Annual Administrative Fee: $30

3. Annual Investment Fee: $0

The chart below summarizes the projected fees on different investment balances for Bank of America.

The following chart illustrates where Bank of America stands in terms of fees compared to the other top investment HSA administrators. 

Bank of America ranks as the third lowest cost provider among the top 10 investment HSAs in our study.

In our search for the very best investment HSAs, we looked for administrators that offered a hassle-free investment experience. Bank of America makes it incredibly easy for investors to manage their account with its intuitive website, automated account transfers, and receipt storage tool for "shoeboxers".

Personal Finance App Integrations

In this modern age of personal finance consumers want the ability to bring together information from multiple accounts in order to get a 360-degree of their finances and make better spending and saving decisions. The two best personal finance data aggragators are Personal Capital and Mint. Bank of America HSA integrates nicely with both of them.

Pros & Cons

A Bank of America HSA may be right for you if:

• You are satisfied with the investment options in the Bank of America investment lineup.

• You are looking for a low-cost HSA investment option

• You desire an online receipt storage tool

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