5,000 American Airline Miles for $12

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Through BankDirect you can ultimately pay $12 for 5,000 American Airline miles – and you can do this on a monthly basis! This means you can pay $144 for 60,000 miles over the course of the year. 60,000 miles is a free trip to Europe in economy class, so well worth $144. But there are some stipulations to earn these points – you must open up a checking account with BankDirect. I’ve been using BankDirect for 4 years now and have earned around 300,000 miles. Unfortunately they changed the program about a year ago to minimize the number of miles you can earn, but I still think it is a great deal!

AAdvantage and BankDirect

I haven’t posted on this method for quite some time, so want to ensure new readers to the blog are up to date on this BankDirect / American Airline partnership. Ultimately, you can earn:

  • 100 miles per month for every $1,000 of the monthly average collected balance in your Mileage Checking Account up to the first $50,000 on deposit. For monthly average collected balances over $50,000, earn 25 miles per $1,000 for all balances over the first $50,000 on deposit.  BEST OPTION
  • or, 50 miles per month for every $1,000 of the monthly average collected balance in your Mileage Money Market Account up to the first $50,000 on deposit. For monthly average collected balances over $50,000, earn 25 miles per $1,000 for all balances over the first $50,000 on deposit.

Personally, I only think maintaining a $50,000 monthly balance is worth it. Anything over that you are not getting a great value for the money in your account. And, of course the Mileage Checking Account is much better than the Mileage Money Market Account.

So if you have $50,000 in your account, you’ll earn 5,000 miles every month. The cost to keep a miles earning account with BankDirect costs $12/month regardless of how much money you have in it. So while you can absolutely keep less money in the account, you are still paying the monthly fee of $12, which might not make the miles you earn worth it.

Now, there is one HUGE caveat to this deal. Your money is tied up in BankDirect and the interest you earn is close to nothing. So there is an opportunity cost there and you will need to determine what that monthly loss is a month. If the money is sitting under your mattress or in another no or low interest checking/saving account then it is a no brainer. But, if you have your money in the stock market making a 10% on average return a year you might think twice. I would say the 60,000 miles is worth a conservative $900. Although if you are looking to use those points for a business or first class ticket then the value will be much more. So if you are able to keep your money elsewhere and make at least $900 over the course of the year then BankDirect is probably not for you. But remember, you will pay taxes on the money earned in the stock market or another high interest earning account. And the miles you receive from BankDirect are tax free. So there are a few things to think about when evaluating whether or not this is worth it, but only you can determine the value based on your particular financial situation.

Now, if you are looking to sign up with BankDirect, there is a decent new member bonus.

  • Earn 1,000 miles for signing up through a referral
  • Earn 1,000 miles for each new Mileage Checking Account or Mileage Money Market Account opened.
  • Earn 10,000 miles for establishing full payroll direct deposit from your employer into a Mileage Checking Account. Needs to be the full amount for six consecutive months totaling a minimum of $2,000 each month
  • Earn 5,000 miles for using BankDirect’s bill pay service. Need to have 3 bill pay merchants totaling at least $500/month for six consecutive months.
  • Earn 5,000 miles for using your BankDirect Visa® CheckCard. Need 12 transactions per statement totaling at least $500/month for six consecutive months.
  • Earn 1,000 miles for referring a friend when they open a Mileage Checking account. You can earn up to a maximum of 10,000 miles (10 referrals).

So you can earn up to 22,000 miles for taking part in the first five bullets and then up to another 10,000 miles miles for referring your friends to BankDirect. So even if you aren’t interested in parking your money in this checking account for the long term, I think it is worth it to get the new checking account bonus miles. If you currently have a BankDirect account and want to refer other blog readers, feel free to comment below.

Since BankDirect is an online bank, they also will reimburse ATM fees 4 times/month up to $2.50 each time. This is great for those that travel often and do not always have access to their local bank’s ATM.

Feel free to share your experience using BankDirect. I personally find the customer service phenomenal and am really enjoying those extra 5,000 miles on a monthly basis! Getting the extra new member bonus points was easy as well.

Comments

  1. If you have $50,000 to put in a bank account, why would you worry about a measly 5,000 miles compared to investing your money and getting more money?

  2. I’ve thought about doing this, but it really doesn’t make sense… At the end of the year you’ve locked up $50K, you’ve spent $144 in annual fees, and you’ve earned 60K Points, so earned value is probably about $800… This is about comparable to 1.6% APR, except your $ is locked up in AA miles.

  3. I agree with other posters: this is a terrible idea. Sure the stock market is unpredictable, but if you have $50K that you can afford to let sit idle for months on end, you should probably be in the market chasing a much better return. This might sound like a decent way to pick up miles, but it’s a very low return investment.

    • As mentioned in the post, it is NOT the best for everyone, although some will definitely find value. You really have to base it on your personal financial situation. There are many people who will not invest their money in the stock market for a variety of reasons.

  4. I’ve had $$ with BankDirect for years. Too bad they cut down the earning above 50k!! Even if you are invested in the stock market you should always have enough tucked away in savings as insurance for unforeseen expenses.

    @Josh. Yes, $800 of value from the 50k AA miles implies a 1.6% yield, but remember that the miles aren’t taxed. On a post-tax basis this blows away any yield you could get in a money-market, CD, or savings account.

    Show me someone who can guarantee a better return in the stock market with zero risk and I have a bridge to sell you!

  5. I wonder if those miles are indeed not taxable… Citibank has treated those miles earned in a checking account as interest income.

  6. You have to compare this offer against other *liquid cash* checking/savings accounts – NOT investments. I’m looking at this 6 months out since that’s where the account bonuses kick in.

    My current savings account is Ally (0.9%), yielding $37.50/mo with $50K in deposit. So in 6 months, I would have earned $225 – 30% income tax = $157. Adding on the cost of maintaining a BankDirect checking account at $12 for 6 months: $72, minus the $25 earned in interest (at 0.1%) and also taxed at 30%, yields a net loss of ~$212.

    For the 5K 12-transaction bonus, let’s assume 12 transactions at $7 or less each, depriving you of your cherished 2% cashback = ~$10.

    So for $222, you’re getting:

    30K miles (5K for 6 months)
    22K miles (Bonus)
    ===
    52K miles

    Not terrible, but it’s FAAARRRR easier to sign up for a US Airways MC. Might still do it though :D.

  7. This is a poor option for $50 k of investment. Paying $144 for 60,000 in miles while that $50k can be invested in the stock market or other places at 7% can earn $3,500. So you lost the $3500 earnings plus the $144 fee and all you get is 60,000 miles — about $.0607 a mile. I can get a Coach flight to LHR for less then $3,644

    • @TomRI – You need to compare this against putting your money into a regular checking account, not the stock market. A checking account and stock market are not equivalent in terms of risk. By putting your money in the stock market if it is a good year you can definitely make more money, but if the market goes sour you probably won’t see the same return.

  8. These guys don’t understand. You are talking about economy flights. Okay let me break it down. MOST international business/first class flights cost anywhere between 5 to 8 grand (and I’m being generous, ive seen them go up to way over 10grand)

    So here is some simple math. You park 50k in the checking, and you build about 60k miles per year. In about 3 years you can afford a round-trip international business/first class flight. (according to AAs off peak reward chart).

    So lets pretend this flight costs 5grand for sake of argument. That really means your 50k FDIC insured account yields 3% tax free on your money. So every 3 years for doing nothing, no chasing points you get a free round-trip first/business class flight anywhere. 3% on liquid money !

    Now personally I think the CD bankdirect offers is even better, because no annual fee. Obviously the miles arnt as great, but so what, you can collect miles on the back-burner for a nice trip, while part of your portfoilio is sitting in a CD.

    This makes more sense for people who have family abroad, and don’t want to sit on a plane for 16+ hours cramped up. If you KNOW you are going to spend the money ANYWAYS….I think its an okay deal.

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