Making Miles with Your Money

While I've never purported to be a financial whiz, I think I'm fairly good with my money. Several years ago, I had quite a bit of money tied up in CD's during the go-go days of the mid 2000's that were earning 5-6% interest. After the terms on these investments ended, I found myself with a decent amount of cash on hand and interest rates that were less than 1%.

Having been bitten by the travel hacking bug, I found that there were several opportunities I could take advantage of my money in earning returns greater than I would've had I just placed it in an interest bearing account or CD. Granted, these techniques are not for everyone, but if you have a sizeable amount of cash lying around earning less than 1%, here are two lucrative ways to earn a greater return in miles.


Making Miles with Your Money

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1. Fidelity: This has been a longstanding offer that gives you 50,000 miles if you deposit $100,000 into a Fidelity brokerage account. As you can see, they partner with several airlines including Delta, American and United and I can confirm that this deal is churnable after a one year period. Before, you could actually cycle the $100,000 in ($10,000 at a time x 100 for example) but lately, they've instituted a hard policy where you have to deposit the full amount and leave it in the account for six months. Still, if you value American or United miles at 2 cents each (Delta's less in my opinion) you're looking at a return of $1,000 on your $100,000 in six months. Additionally, these miles are not taxable, so in some ways this is actually better than the effective 2% APY that's shown above based on your individual tax bracket.

2. Bank Direct: This is a small online based bank that is affiliated with American Airlines. Currently, they offer 10 miles per $100 deposited (up to $50,000) into one of their special mileage earning savings accounts. Unfortunately, they implemented a $12 monthly service charge a few years ago, so you should really do the math and see if it's worth your while. I've had $50,000 deposited with Bank Direct for several years now, and it's a great feeling seeing 60,000 miles added to my account balances each year. Doing the math again at 2 cents per mile, minus the $144 annual charges, I get a net return of roughly 1.6% accounting for my tax bracket.


Image_from_nytimes.com.jpg

Image from nytimes.com

Again, this post is for informational purposes only as I am not a registered tax professional or accountant. Still, I think that if you have a sizable amount of cash on hand, it's a good idea to branch out and see if you can't get a better return in miles than you can in an interest bearing account.