Earning Big Miles for Checking Accounts and Investments

Since BankDirect announced reduced mileage-earning for checking accounts that hold over $50,000, I’ve gotten several questions about other banks that will reward you with miles.

I’ve been a BankDirect checking account customer since July 2003, and I use it as a checking account. It is not an investment account that pays a rate of return in miles rather than money (and which doesn’t report earnings to the IRS).

Sure, in a very low interest rate environment that can appear attractive. BankDirect awards 100 American Airlines miles per every $1000 average balance every month. Depositing $50,000 at the bank generates 60,000 miles per year. If you value those miles at 1.5 cents apiece that’s a $900 return which isn’t reported to the IRS. If your rate of return on that cash would otherwise be somewhere less than 3% you’re probably coming out ahead.

But I’ve never justified it that way, and the account has still made sense. I have business expenses that get reimbursed, they sit in my checking account for a few weeks before getting shipped over to my credit card company. So the cash has to remain liquid, and it’s easiest to pay the bill from a checking account. Parking cash in BankDirect has been lucrative for me, much more lucrative than big balances with any other checking account would have been.

With declining profits to banks for holding checking account cash, they instituted a $12 per month fee — that you can not get out of with minimum account balances or with payroll direct deposit. And so I no longer think the account makes sense for people that don’t carry ~ $5000+ average balances.

Squeezing the value at the low end through fees and at the high end by only awarding 25 miles per $1000 on balances over $50,000 has caused folks to go looking at alternatives. And the bottom line is that there really is no direct replacement for BankDirect, although there are several options for earning miles through your banking and brokerage relationships.

Miles for Checking Accounts

Other checking account products earn miles for signup, but I don’t know any others that reward you on an ongoing basis for the balances you keep in your account. Two banks that offer mileage signup bonuses for checking accounts are:

  • UFB Direct offers 1000 American Airlies miles for direct deposit and they offer an American Airlines mileage-earning debit card that gives 1 mile per $2 in spending, not to exceed 120,000 miles per year.

  • Citibank often offers American Airlines bonuses for new checking accounts – these offers usually include a requirement of spending on their debit card and also direct deposits. I wouldn’t take their 30,000 mile offers, though, since Citi sends out 1099 forms reporting the miles awarded on their banking products to the IRS. If you’re paying taxes on those miles you’re not really coming out ahead, as the reported values tend to be rather inflated.

Mileage-earning Debit Cards

There are also still mileage-earning debit cards, and not only the one above from UFB Direct.

Now those products have mostly gone extinct, since the Durbin Amendment made checking accounts less profitable and capped the interchange fees charged on debit transactions such that it’s no longer profitable to reward debit charges.

But Suntrust Bank offers a Delta miles debit card that earns 1 mile per dollar spent. Through the end of June they’re offering up to 10,000 Delta miles for a new debit card: 5000 miles after first purchase to also include 5000 additional miles $1,000 in purchases within 90 days of account opening. The usual offer is just that 5000 miles after first purchase. The card comes with a $75 fee.

I find the Suntrust debit card especially useful for paying taxes. Because while the fees for paying taxes by credit card are quite high, at the lowest nearly 2%, and so I don’t find that attractive… PayUSATax.com offers $3.49 debit transactions, regardless of amount. Paying a $5000 tax bill earns 5000 miles with the card, for a $3.49 fee. (Suntrust tells me they cap debit transactions at $35,000.)

The biggest challenge some face with Suntrust is that they seem to allow anyone to open an account online, but there are plenty of reports of account closures for people who do not list an address in one of the states they operate in.

There’s also still an Alaska Airlines mileage earning debit card from Bank of America. I didn’t realize that was the card, since they don’t seem to promote it, but I got the link to request one from Free Frequent Flyer Miles. It earns 1 mile per $2 in spending, but Bank of America doesn’t award points for tax payments.

Miles for Investing

Years ago I opened a TD Ameritrade account and earned Starwood points for my initial deposit, though it appears TD Ameritrade no longer has any mileage offers that I can find.

Sharebuilder offers small signup bonuses of 2000 miles with US Airways (I used this as a ‘Grand Slam’ hit a couple of years ago), with United, and with Delta (Skymiles elites actually earn 3500 points). These Sharebuilder links are courtesy of Free Frequent Flyer Miles as well.

But the big mileage earning comes from Fidelity.

Fidelity offers up to 50,000 miles from your choice of American, United, or Delta with a deposit of $100,000. You used to be able to ‘cycle’ the same money in and out to get up to that $100,000 mile threshold, but it no longer seems to be possible.

With each of these offers, Fidelity will give you up to 50,000 miles based on the amount you deposit into your account within 90 days of opening.

  • 15,000 miles for a $25,000 deposit
  • 25,000 miles for a $50,000 deposit
  • 50,000 miles for a $100,000 deposit

And while Fidelity doesn’t give you an ongoing bonus for your balance the way that BankDirect does, you can earn one bonus per 12 month period. So get the 50,000 American miles if you can park that much cash or move in that big an investment, wait 12 months, and get a bonus through another airline offer. And these three mileage-earning bonus offers have not, to date, been 1099’d.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Gary- for those of us that already have a Fidelity account, can it be linked to this mileage product?

  2. @Romsdeals,
    Directly from the offer page:
    This promotional offer is only available to new or existing Fidelity brokerage account customers opening or depositing net new assets into a joint or individual nonretirement Fidelity Account®.

    Promotional offers are limited to one per individual per rolling 12 months.

  3. One minor warning–I did the Citibank AA miles thing myself. Got the miles and closed the account. A few months later I opened an account for the wife intending to repeat the process. But after the initial deposit the account was frozen for some reason (the Citi people on the phone didn’t know) and the only way to fix it was apparently a trip to a branch, and we don’t actually have any that close to us and the wife wasn’t interested in doing that. So we closed the account and they’re sending us a check for the balance. Oh well.

  4. Check in advance with Fidelity before you move any funds. They seem to have a lot of fine print and conditions associated with this offer. I moved $100K in and they wouldn’t give me any miles because I have an investment advisor make my specific Fidelity investment decisions. Also note that Fidelity can be particularly hard-nosed.

  5. Gary ,
    Do you or anyone on the blog know if I get a hard pull
    for applying for the Alaska debit card with BOA ?
    Did a recent mini App with AX Bus Gold and BA Avios.
    I have a CC with Alaska and a checking account with BOA.
    THANKS for your input

  6. The Fidelity account must remain open with minimum funding for six months. Additional deposits to the eligible account will earn the customer a higher mileage award provided such deposits put the cumulative deposits above the next eligibility tier (up to a maximum of 50,000 miles). Initial and subsequent deposits must be made within 90 days of account opening.

    For comparison, Fidelity offers a cash bonus of up to $2,500 for opening or adding to a Fidelity account. See https://scs.fidelity.com/other/offers/registration_casha.shtml. Caution: This bonus may be included on an IRS Form 1099, where, in my experience, the miles are not.

    Be careful. Read all of the terms and conditions. Also, after you register for the offer, but before you transfer assets to Fidelity, call them at 800-544-3719 or the number you use for your account and ask them to verify that you are eligible for and are registered for the offer you want. Once the say yes, ask the rep to write a note in your account saying that he or she did this verification. Then (as happened to me twice, today being the latest), if you get an email saying you are not eligible for the offer for which you registered, call them again, asking them to read the notes on your account. They will probably tell you that the email was automated and was sent in error and that they will hand babysit the funding and resultant miles. They have done this successfully in the past.

    Sometimes you can easily transfer assets online, But occasionally (as in a revocable living trust account, for example) they will require that you give them a lot of paperwork. If you have a local Fidelity office, just bring in everything required and they will copy and mail it for you. Easy.

    Remember that this offer can be repeated annually. So mark your calendar appropriately. The assets must be kept in your account for at least 6 months, or they will claw back your miles.

    Through various offers throughout the years, both Fidelity and Ameritrade have given me enough miles for many overseas business class tickets This is well worth doing, especially if you have $100k in assets you can move between brokerage accounts. It’s easy – Fidelity does all the work.

  7. @stefan…I just got the Alaska debit card a month ago. I didn’t receive a hard pull. The only thing that differs from your situation is that I was opening my BofA checking account at the same time. Maybe it’s different for people with current accounts, but hopefully not.

  8. Gary,

    Despite how much you have in the bank accounts, most of those debit cards have set a limit for using as a credit card. The limit ranges from $1000~$2500. In other words, if your taxes are over that amount, you technically could not use those debit cards to pay your taxes.

  9. Gary – the B of A Alaska Debit card comes with a $30 annual fee, so at a generous valuation of .02/mile and half-point per dollar earning, you need to spend at least $3,000/yr on the card to “break even” (most of your readers probably spend that in a month)

  10. I never saw the need for the bank united offer. I just never felt a few miles here and there would matter much. With a monthly fee forget that one. I did not know citi sends 1099s for the miles with banking. I have not done any of that myself.

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