Bank of America to Pay $39 Million in Cash-Interest Settlement

Bank of America will pay $39 million to settle customer claims that it paid too little interest on their cash, according to a report from Investing.com. The agreement resolves a dispute over how the lender handled client balances rather than letting the matter continue through the courts.

Cash sitting in brokerage and advisory accounts has drawn growing scrutiny across the industry in recent years. As benchmark rates rose, the gap between what institutions earned on idle deposits and what they passed along to customers became a frequent source of complaints and, in some cases, litigation.

Under such arrangements, firms typically sweep uninvested cash into affiliated money market funds or bank deposits, capturing a spread along the way. Customers contend those yields lagged what was available elsewhere, while banks describe the programs as offering convenience, stability and insurance coverage.

The $39 million figure is small relative to Bank of America's overall earnings, but the case adds to a broader pattern of attention on cash management practices. On its own, the settlement does not resolve the wider debate about how clearly firms disclose the rates they pay on client cash.