Originally Posted by Ken in Phx
40% bracket you would be paying $41,500 for 1.2m AA miles ( .0346 /mile )
25% bracket you would be paying $50,625 for 1.2m AA miles ( .0422 /mile )
I would take the cash. I dont see why it would work at any dollar amount, but thats just my opinion.
Ken in Phx
For some reason, the math was off in the above example, so just in case you guys haven't already done it yourselves, here is a little more accurate picture (still overly simplistic as it does not take compounding and many other real world senarios into consideration):
1,000,000 at 3.00% at ING = $30,000
1,000,000 at 0.75% at BD = $7,500 + 1,200,000 Miles
40% Tax Bracket:
ING Yields $18,000 After Tax
BD Yields $4,500 After Tax + 1,200,000 Miles
Real cost of Miles = $13,500 (or $0.01125 per mile)
25% Tax Bracket
ING Yields $22,500 After Tax
BD Yields $5,625 After Tax
Real Cost of Miles = $16,875 (or approx. $0.014 per mile)
At just over a penny a mile, one could at least argue that it worth a look.