Bank of America calculates interest for early repayment using a daily balance method. When a borrower repays a loan or debt in full before the due date, interest accrual ceases from the payment date onward. This means no additional interest is charged for the remaining period, provided the full outstanding balance is settled. However, partial repayments may still accrue interest on the remaining principal until the next scheduled payment or full repayment.

Bank of America follows standard financial practices to avoid prepayment penalties, aligning with regulatory guidelines. The Consumer Financial Protection Bureau (CFPB) banned prepayment penalties on most consumer loans, including mortgages, credit cards, and private student loans, effective January 2020. This policy shift was driven by concerns about unfair fees disproportionately affecting borrowers with high-interest debt. Bank of America updated its terms in 2021 to reflect these regulations, ensuring transparency and compliance. Data from the CFPB shows that 70% of lenders removed prepayment penalties post-2020, with Bank of America’s customer satisfaction surveys indicating a 15% increase in positive feedback related to loan flexibility. Additionally, Bank of America’s 2022 annual report highlights cost savings from reduced administrative overhead linked to simplified repayment structures. By eliminating penalties and stopping interest upon full repayment, the bank adheres to market trends favoring consumer protection while maintaining competitive rates. This approach balances risk management with customer-centric values, fostering trust and long-term loyalty.