Shares of the nation's largest bank rose 9.37 percent by Thursday afternoon, although Buffett was given generous terms for his purchase.
Buffett's company Berkshire Hathaway will receive a 6 percent dividend or, if the bank chooses to redeem his shares, they will need to do so at a 5 percent premium.
Not quite a standard step taken by someone buying a few shares, Buffett reportedly phoned Bank of America's Chief Executive Officer Brian Moynihan "to tell him I wanted to invest in it," Buffett said in a statement.
BofA has been struggling due to the general turmoil in the economy and also due to its 2008 purchase of lender Countrywide Financial Corp. just before the subprime mortgage market turned sour.
Buffett, a savvy investor known as the Oracle of Omaha, made his purchase with BofA shares at their lowest point since March 2009.
Along with 50,000 shares of preferred stock, "with a liquidation value of $100,000 per share to Berkshire Hathaway," Buffett received warrants to purchase 700 million shares of Bank of America common stock "at an exercise price of $7.142875 per share," BofA said.
Exploding whale video goes viral on Internet
Benedict Cumberbatch's dramatic reading of R. Kelly lyrics is just what you need