Originally Posted by
Happy
The account only makes sense for folks who have high amount of idle cash which they do not want to have it subject to market risk (hence not the usual equity investment).
I disagree. It only makes sense if your valuation of AA miles is high and you don't want to manage multiple rewards checking accounts at multiple banks. Even now you can get 3% APY or more. The debit card usage requirements will get to you but its just a few minutes of work paying your utility bills in small increments.
Let's say you value AA miles at X cpm, your marginal tax rate is Y% and that you keep a balance of P grand in the account.
Assuming a constant earn rate of 10% of balance per month, the value of miles you earn over a year is $12PX-144. The post-tax interest money you are giving up is at least $0.3P(100-Y).
Your valuation of AA miles needs to be at least (2.5+12/P-Y/40) cpm otherwise you are better off putting your money in RCA's and buying tickets from the interest.
The largest value I am willing to put for X is 1.5 and it never made sense for me to keep the account after getting all the bonuses. Its worse now because they don't help you in getting lifetime gold/platinum and they are going to ding you with fees.