Earn American Airlines AAdvantage miles with a bank account at BankDirect

One way I’ve been topping out my American Airlines frequent flyer balance for years now is with a Bank Direct account.  Several years back, this account was uncapped and earned 100 miles for every 1,000 on deposit every month.

But around the time in 2011 that the AAdvantage ”Million Miler” program was changing to only count miles earned “butt-in-seat” rather than from any source (and recalls a few months of people opening BankDirect accounts and especially CDs, hand over fist), Bank Direct must have realized this program was costing them too much as they enacted some limits of their own.  Since then, not as many people talk about these accounts, but they are still a great way to earn

5,000 – 7,500 AAdvantage miles every month if you can put $50,000 – $100,000 on deposit with them.

Now, let’s have a quick disclaimer that I’m not “advising” you to open this account nor is it right for everyone’s financial situation.  But if you currently have $50,000 or more in any standard savings account or money market account earning around 1% interest, it may well be.

Let’s start with the two accounts you’ll need to open at Bank Direct and then the strategy:

1. Mileage Checking with Interest account. These earn 100 miles per month per $1,000 in balance UP TO $50,000. $12 monthly fee applies.
2. Mileage Money Market account. These earn 50 miles per month for every $1,000.00 of the collected balance UP TO the first $50,000.00 on deposit.

The strategy:

If you have $50,000 to invest you will actually get the best payout. More than that loses a bit, though it’s still worthwhile up to $100,000.

For $50,000 on deposit you’ll open just a checking account, pay the $144 in fees ($12 a month), and earn 60,000 miles a year. At 1% interest, that same 50,000 would have earned $500 and you’d have paid tax on that netting you in the ballpark of $250-$400 in actual cash.

I value AAdvantage miles at somewhere around 1.3-2 cents each. (I don’t apply a fixed number like some people do – but I feel it’s generally worth in that range as a baseline.).  Even at the low end of that calculation my 60,000 miles are worth $780. Miles aren’t taxed in this case, so I’m getting $780 + (minus the $144 in fees) in miles value vs substantially less cash. But this ignores that on premium redemptions I can get up around 5-10 cents a mile in value. So those 60,000 miles can be worth much more than my baseline.

Now if I have another $50,000 to put in here, I can’t put that in the same account. Bank Direct drops the earning rate from 100 miles per $1,000 to a measly 25 miles per dollar after the first $50,000.

But they do have the Mileage Money Market which will earn 50 miles per month for that $1,000. It’s clearly only half as good as the Checking deal, but twice as good as having an amount over $50,000 in the Checking account.

A hypothetical $50,000 in the money market, which has no fees, will earn 2,500 miles a month.

Now this is more of a tossup. That money at 1% is $500 minus your tax rate (so again, it will net out to around $250-$400). In miles you will get 30,000 a year.  It’s a much closer call but again, with my baseline saying a mile is worth at least 1.3 cents, and sometimes much more, I’ll personally take the miles. To me, the lure of a first class seat on Cathay Pacific beats the cash.

Summary

The best deal is $50,000 for 60,000 miles a year (minus $144 in fees). You get this in the Interest Checking account.

The second best deal involves adding a Money Market account with a second $50,000. If you do this your TOTAL earnings will be 90,000 AAdvantage miles in a year.  What can you do with that many miles?  You could fly New York to Los Angeles in AA’s lie flat business class seat and have 25,000 miles to spare. Or you can fly from North America to Europe one way in business (57,500 miles) and back in coach (22,500 miles off peak or 30,000 miles peak). If you go ff peak you will even have enough left for a short haul flight in coach from NY to Toronto or Montreal.  Or you could even fly New York to Tokyo on Japan Airlines in FIRST CLASS (but only one way 😉 ) for 80,000 miles.

To Apply

If you contact me, I can email you a referral where you will get 1,000 bonus AAdvantage miles with your new account (and I’ll get 1,000 miles as well).

But if you prefer to skip the 1,000 bonus miles, just head over to the BankDirect website to apply.