We've sidetracked a bit away from the topic of "Miles for Large Bank Balances".

I noticed that BankDirect gives a full month's-worth of miles for the first partial month that you open up a new account with a deposit. This must be a glitch in their software, or they are really lazy to not fix it.

Miles get credited on the first of every month. The number of miles credited is based on the average balance for the month but seems to be independent of the number of days in the month that the balance has been there. As an example, if you deposit $250k on May 27, on June 1 you will get 25k miles. The 25k is not pro-rated for the partial month. If you had instead deposited the $250k on May 1, you would have gotten the same amount of miles (25k miles).

Another theory is that they're aware of this and doing it so that they can claim that the miles aren't really taxable interest for their customers, but rather a monthly bonus reward. I admit this is farfetched but I'm still surprised a glitch like this can exist.

For those who don't want to reach for the calculator, 25k miles at just 2cpm in 5 days works out to an annual rate of 15.7% interest on $250k. At 3cpm, you can start feeling like a credit card lender.

In a practical sense, you can't reinvest at this high rate every day of course. But, if one really wanted to maximize this, I suppose one could keep their money in one of the 4%-5% checking accounts for nearly the entire month, then transfer the cash to a newly-opened BankDirect account right at the end of the month. Yes, this would be a lot of hassle but my guess is that anyone who's willing to jump through all the hoops for the 4-5% accounts, won't mind one extra hoop to basically double up their interest. This would probably work until BankDirect starts wondering why you keep opening up new accounts each month.

By the way, I am not speculating here. I have opened up two new accounts at BankDirect, each at a separate time. In both cases I got a full month of miles even though my money was there only a few days. I plan on leaving my money there so I won't be exploiting the glitch but I thought I'd post it and see if a "Churning BankDirect accounts" thread develops on FT in a few months