Originally Posted by
EmAAx
This sucks, but I still think BankDirect checking is an ok deal. If you have $50k in a checking account, you'll get a 1099 for $210. Correct me if I'm wrong, but you only pay taxes on whatever your tax bracket is. Let's say you are at a 33% bracket, you pay $70 in tax and $144 for the account fee which is $214 for 60,000 miles. Your cost is $0.0035/mile, well below the assumed value of $0.014/mile. In this scenario, I calculate about a 1% return on your money. You can do better with 4 week Treasury Bills or something like Capital One 360 savings which they are advertising at 1.8%, but these also aren't checking accounts.
Close, except you need to keep it enough above $50,000 to prevent the fees dropping you to 4,900 miles/month. Call it $50,145 deposit, minus $144 in fees, plus $5.04 in interest paid, yields 60,000 miles and your $70 tax liability. Ignore time value of money, and not paying tax until April, and etc. etc.: 70+144-5 = $209 for 60,000 miles = $0.00348/mile.
But that's not the best way to look at it, since it doesn't factor opportunity cost.
I could put that $50,000 at Fidelity or another high yield CMA; let's assume 1.9% APY; that's $950. So, at BankDirect or Bask, regardless, I put $50,145 for a year and get 60,000 miles, which at your (imo generous) $0.014 is $840 of value, minus $209 out of my pocket (at BankDirect) or $65 out of my pocket at Bask -- or I could have $950 of cash.
Run that backwards, and at $0.014/mile valuation, APY on cash would have to be below 1.55% for Bask to make sense, and below 1.26% for BankDirect to make sense. I'm going to wait for my next mile deposit (about a week) and then close the BankDirect.
Edit: yuck; I didn't account for tax on the interest. That makes it a
lot tighter: $950 of cash minus $313 of tax = $637 for the CMA option. Still debatable, but closer.