BankDirect - AA Miles with checking account

Discussion in 'Newbies' started by euromannn, May 22, 2012.  |  Print Topic

  1. euromannn
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    euromannn Gold Member

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    ANyone still recommending BankDirect checking with AA mileage?

    Get 10% for average balance per month up to $200,000. Then there is a statement you can go over $200,000 with no cap.

    1. I didn't sign up one year ago due to problems with BankDirect customer service is setting up the account with digital signature issues, etc.

    2. Also, was concerned about whether the AA miles would be taxed which was uncertain.

    3. Concerned whether AA miles still count towards the Million mile status and seat availability since AA was going bankrupt.

    Any recommendations?
     
    iolaire likes this.
  2. NYCAdventurer

    NYCAdventurer Gold Member

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    I still have my account open, but it is no longer free. All mileage accounts now have a monthly fee of $12. All depends on how much money you will be depositing and what else your money can do for you if not with Bank Direct.
     
  3. iolaire
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    iolaire Gold Member

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    2. Not last year
    3. They no longer qualify

    Yes I still use bank direct, but am holding on o it until I reach my next award, after that the money probably goes to an stock account.
     
  4. euromannn
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    euromannn Gold Member

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    Do you know the balance requirement to waive the fees? Or is it the number of account features like direct deposit, ATM stage etc?

    Does AA still count these point toward the MM club?
     
  5. NYCAdventurer

    NYCAdventurer Gold Member

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    There is no way to get the fee waived and AA only counts actual flight miles towards MM. The only way to get additional miles is if flying on a promotion offering DEQM.
     
  6. euromannn
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    euromannn Gold Member

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  7. NYBanker
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    NYBanker Gold Member

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    Small correctio: They also count cc points towards mm through December of this year if you have the executive level citi card.
     
  8. NYBanker
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    It is a poorly disclosed fee...but it is charged. $144 per yr. If you have $100k on deposit, you get 120k miles for $144 in fees plus the opportunity cost of bank deposits.

    Assuming you keep $50k and value AA points at 4cpm, this is still a no brainier.
     
  9. euromannn
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    euromannn Gold Member

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    Interesting, so it is not a $12 fee but a $12/monthly fee?? $12/mo=$144

    So the miles are not taxed but BankDirect now has acoutn fees not disclosed "openly" on it's web site. Reminds of the problems I had signing up with them.

    So for $50,000 deposit what is the fee? $144? Ouch!!!!
     
  10. euromannn
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    euromannn Gold Member

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    One Mile at a Time - Monthly service fee coming to Bank Direct mileage checking accounts?

    Comments

    Given the low interest rates, one of the better “risk-free” places to park money has been with Bank Direct in a mileage checking account. You earn 100 miles per month for every $1,000 of the monthly average collected balance in your account. That means you earn 1,200 miles per year, and at 1.5 cents per mile that’s about a 1.8% return tax free, so to many that’s the equivalent of ~2.5% interest.
    I’ve been late to the game and only opened a Bank Direct account earlier this week, though the funding went through and I received my welcome kit. While browsing FlyerTalk this morning I came across this post, where a FlyerTalk member posts a letter he received from Bank Direct stating that as of January 2012 mileage checking accounts will be charged a monthly service fee of $12. Oddly no one else has posted saying they received the same letter, so as of now I wouldn’t quite put this in the “confirmed” category yet.
    Well, that would royally suck, though might just be my luck. While this probably won’t change the strategy for those with $100K+ parked in a Bank Direct account, for those with smaller balances this may be a reason to reconsider. This is especially true since a lot of people accrued AAdvantage miles through Bank Direct for lifetime status with American, and the ability to do that ends on December 1.
     
  11. euromannn
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    euromannn Gold Member

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    BankDirect is no longer good option.
    Terrible customer service and now $12/month fees for the AA checking account.

    Once a great real.
     
  12. gleff
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    gleff Co-founder

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    I still use BankDirect. I do not consider it a good option compared to investing money but I do consider it a good option for a checking account considering that I wind up carrying large checking account balances -- I have some pretty hefty business expense reimbursements. Those funds sit in my account for a couple of weeks before paying off my credit cards. The average monthly balance is pretty high, though the funds are extremely short-term. So it works for me.
     
  13. euromannn
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    euromannn Gold Member

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    gleff,
    Do you consider teh Cost Per Mile(CPM) still a good de?
    Thus $200,000 balance gets 10% AA miles or 20,000/moth.

    Fees $12/month for 20,000 points = .0006/point
     
  14. gleff
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    gleff Co-founder

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    It's a great cost per mile.

    The question is whether it's worthwhile on an opportunity cost basis. You're giving up something to earn those miles -- whether it's a modest return on an interest earning checking account (which is very low these days, and taxed) or the returns on investments.

    Roughly speaking I view this as a good checking account if you are in a situation like I am, big checking account balances because you have short-term dollars cycling through the account.

    It's a harder case to make when comparing what you might earn in investment returns on a couple hundred thousand dollars. It's going to depend on what sort of time horizon and investment strategy you're employing, but that's what you need to compare it to. Since you GIVE UP those returns when you put the funds into your BankDirect account.

    BankDirect works great for me, even with the fees. E.g. even if I earned just 50,000 miles a year, the money would otherwise be sitting in a checking account accruing almost nother, so I'm 'buying' those miles for less than $150. No brainer.

    But YMMV based on your financial situation, what you'd otherwise do with the money.
     
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  15. NYBanker
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    I disagree with you on this one. Putting up $100k gets me 120,000 miles. Assuming I redeem those miles for a $5000+ first or business class ticket over the ocean (which I would pay cash for otherwise), that's a 5% after-tax return, less a $144 fee. For a liquid, FDIC-insured cash account, I can't do anywhere near as well elsewhere.

    Of course, I face devaluation risk of AA miles. I actually do pay personally for premium cabin travel from time to time, so these savings for me aren't theoretical, but real.
     
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  16. euromannn
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    euromannn Gold Member

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    ALthough the cost ratio M IGHT be a bit more favorable redeeming miles at $144 annual fee + lost interest the MAJOR problem is seat availability. Business class helps but finding seat availability for FF RSVP is difficult to many locations even on AA.
     
  17. NYBanker
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    I solved that problem....for Christmas this past year, I used double miles (non-capacity controlled on AA) F (three class F) awards to go to Hawaii from NYC with my family of four. Even with double miles, my trip still penciled to a 3.5cpm valuation. A little less than my math above, but still attractive....and without capacity controls so I could pick whatever flight I wanted.

    It would have been 7cpm had saver awards been available....but unrealistic to expect 4 F savers over peak Christmas weekend travel days.

    http://www.sitinfirst.com/2012/01/christmas-in-hawaii-part-10-conclusion/
     
  18. euromannn
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    euromannn Gold Member

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    Comparison: BankDirect(checking w/ Mileage) vs INGDirect(electric Orange checking)

    Based on $200,000:
    Interest rates: 0.01% vs 0.9% APY
    Total interest: $20 vs $1800
    Miles: 240,000 vs 0

    Now the debate is over 2 120k FF seats options, their worth(tax free), seat availability and whether the IRS will tax which is a continual threat.
     
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  19. icurhere2
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    icurhere2 Gold Member

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    Depends upon how much one wants to work, but local credit unions often have high-yield checking promotions - mine offers 2% APY on balances up to $25,000 with the provision that I make 10 debit transactions per month. I use the 10 transactions to support my Amazon.com habit via the interest.
     
  20. euromannn
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    euromannn Gold Member

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    What is the name of your credit union? And, can all apply or limited to in-state or special circumstances?

    ATM transactions - I used a grocery self checkout scanner to buy 10 items(apples, bananas, soda, etc)......rang up each one separately......was
    done in 5 extra minutes.
     
  21. deant
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    deant Milepoint Guide

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    The real question in any of these calculations is the potential tax liability. No one knows if Bank Direct will follow Citi and issue 1099's for the mileage. Remember, in this case the mileage is absolutely an "interest /bonus" and is not tied to any spend requirement,
     
  22. euromannn
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    euromannn Gold Member

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    I added that to the equation as the IRS could determine face value of 120k points as $4000 which would be another $1000-$1500 taxation out the BankDirect award.

    Too cumbersome to TRUST BankDirect in doing anything as they screwed up at least 2 accounts due to digital signature authorization criteria.

    BankDirect is NOT the brightest apple in the barrel.
     
  23. gleff
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    And I'd point to the recent promo about a month ago where AA was offering to sell miles directly at 2 cents apiece as a ceiling on the valuation.
     
  24. euromannn
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    euromannn Gold Member

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    Yes, I agree in comparison to buying the miles the BankDirect is a good option IF you have cash to loan out to them.

    Guess all good things come to an end and the free AA mile offer at BanKDirect is now with bank fees. Still, there customer service is inept in getting account issues resolved which is a scary statement when your thinking of loaning that bank $200,000.
     
  25. gleff
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    gleff Co-founder

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    My point was that I would dispute the value of the miles if there was ever a 1099 for them, and pay taxes on the lower valuation.

    I've had reasonably good customer service from BankDirect, for what it's worth. And I've been banking with them since July 2003.
     

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