Bank Direct to limit / cap AA miles on checking
Apr 1, 2011, 8:14 pm
#196
Join Date: Aug 2003
Posts: 324
Sharka's learning curve will be considerably steeper and much more painful once interest rates begin a long term trend higher.
Thanks for saying what I wanted to say, only better.
Last edited by Alfonso XIV; Apr 2, 2011 at 8:12 am
Apr 1, 2011, 9:59 pm
#197
Join Date: Jun 2001
Location: San Antonio, TX, AA Plat 3MM
Posts: 46
Cash exodus in April from BD?
I have two family members with 1 million plus in each account. Plus several other family members with six figure accounts under and over 200K at BD. The large accounts were attempting to get from lifetime gold to lifetime platinum, which could be attained in just 10 months for 1 M account at BD!
I called last month to BD and spoke with rep, then supervisor, then a VP at the bank.
I reminded that they are paying us in miles and getting millions of dollars that they can lend out at higher rates. I told them that the 2 accounts with 1 million plus with each be brought down to the 200K level during April. And same with the other 200K plus accounts. They were unconcerned.
They offered the lower rate of mileage for 200K plus, and said we could move money to a CD. I explained this was an unacceptable mileage devaluation, and they understand exactly what they are doing.
And, on a separate note, I agree with Happy. I would not own muni funds or other bond funds when interest rates are going to rise. Individual muni bonds is a different story. I hold ladders of these and always hold to maturity, so I know my yield to maturity when I purchase. I am careful to diversify across many different issues, and am picky about what issues I buy, plus I avoid CA, NY IL etc. YMMV!
As another mentioned, I think a transfer of a few $ to Fidelity is in order. We are existing Fidelity customers, and another family member is also existing customer - we were each offered the 50K bonus AA miles for a new 200K deposit. (see separate thread for Fidelity).
I called last month to BD and spoke with rep, then supervisor, then a VP at the bank.
I reminded that they are paying us in miles and getting millions of dollars that they can lend out at higher rates. I told them that the 2 accounts with 1 million plus with each be brought down to the 200K level during April. And same with the other 200K plus accounts. They were unconcerned.
They offered the lower rate of mileage for 200K plus, and said we could move money to a CD. I explained this was an unacceptable mileage devaluation, and they understand exactly what they are doing.
And, on a separate note, I agree with Happy. I would not own muni funds or other bond funds when interest rates are going to rise. Individual muni bonds is a different story. I hold ladders of these and always hold to maturity, so I know my yield to maturity when I purchase. I am careful to diversify across many different issues, and am picky about what issues I buy, plus I avoid CA, NY IL etc. YMMV!
As another mentioned, I think a transfer of a few $ to Fidelity is in order. We are existing Fidelity customers, and another family member is also existing customer - we were each offered the 50K bonus AA miles for a new 200K deposit. (see separate thread for Fidelity).
Apr 2, 2011, 12:03 am
#198
FlyerTalk Evangelist
Join Date: Jul 2003
Location: Florida
Posts: 29,804
And, on a separate note, I agree with Happy. I would not own muni funds or other bond funds when interest rates are going to rise. Individual muni bonds is a different story. I hold ladders of these and always hold to maturity, so I know my yield to maturity when I purchase. I am careful to diversify across many different issues, and am picky about what issues I buy, plus I avoid CA, NY IL etc. YMMV!
With the bond funds, you are basically a loser when the NAV drops below your purchase price - there is NO "sitting on it till maturity" to wait it out as the holdings would keep changing.
As another mentioned, I think a transfer of a few $ to Fidelity is in order. We are existing Fidelity customers, and another family member is also existing customer - we were each offered the 50K bonus AA miles for a new 200K deposit. (see separate thread for Fidelity).
Though 50K for 200K new money is pitiful - it translates to 0.0025% for your money at 1cpm.
Fidelity's FSLXX now is paying less than a regular checking account in some banks, including the banks used for mySmartCash.
Apr 2, 2011, 8:53 am
#199
Join Date: Aug 2006
Posts: 756
Hello Happy,
Thanks for the replies. Nice to know others with the understanding of the issue although it was not meant to be an issue or controversy to begin with.
Just to clarify, as I was using very basic and simplified examples as not to be confusing but as it appears to me now it has for some.
You are correct about the insurance issue if it was based on individual bonds held but as stated in my 1st post , I do have it in Muni Funds also, issued by the brokerage firms themselves. Yes, no guarantees of loss of capital of the fund but if the firm itself went under (as some famous big brokerage firms did during this last financial crisis), my Fund is covered. So, won't take a big complete loss if the firm went belly up, just the loss of value in the fund itself via day to day cycles. But as I stated before, I took alot off the table in the Muni funds last year when news about some states not being able to meet their obligations started.
But, I do have most in individual obligation (bonds) that I purchase early on. Note: buying a Fund is alot safer than individual bonds for those not knowing or doing enough research as many funds hold several hundred bonds or more and likelyhood of giant losses is minimal unlike holding individula bonds)but thankfully time is nearly due on them and it will be very profitable in a year of so (if it doesn't default by that time)-so far have not heard any bad news on it and all my bond I bought are still rated A or more right now. Yes, even A rated bonds have gone under lately , so no 100% guarantees but odds are unlikely.
Yes, I do consider myself very lucky to have picked a good time within the last 8+ years to be in this field as during this time, I saw the price of my Muni funds more than double, and this in the face of making a whole lot of mistakes early on that caused some capital losses. But thankfully, I quickly learned from the mistakes and carried on with success (so far)
.
But am sorry to hear about your experiences in the 80's as I was not in Munis at that time, so could relate to my early days (when I had losses) with what you had gone through.
Again, perhaps we are getting off topic.
Just for disclosure, I do have money in Bank Direct.
Cheers
Thanks for the replies. Nice to know others with the understanding of the issue although it was not meant to be an issue or controversy to begin with.
Just to clarify, as I was using very basic and simplified examples as not to be confusing but as it appears to me now it has for some.
You are correct about the insurance issue if it was based on individual bonds held but as stated in my 1st post , I do have it in Muni Funds also, issued by the brokerage firms themselves. Yes, no guarantees of loss of capital of the fund but if the firm itself went under (as some famous big brokerage firms did during this last financial crisis), my Fund is covered. So, won't take a big complete loss if the firm went belly up, just the loss of value in the fund itself via day to day cycles. But as I stated before, I took alot off the table in the Muni funds last year when news about some states not being able to meet their obligations started.
But, I do have most in individual obligation (bonds) that I purchase early on. Note: buying a Fund is alot safer than individual bonds for those not knowing or doing enough research as many funds hold several hundred bonds or more and likelyhood of giant losses is minimal unlike holding individula bonds)but thankfully time is nearly due on them and it will be very profitable in a year of so (if it doesn't default by that time)-so far have not heard any bad news on it and all my bond I bought are still rated A or more right now. Yes, even A rated bonds have gone under lately , so no 100% guarantees but odds are unlikely.
Yes, I do consider myself very lucky to have picked a good time within the last 8+ years to be in this field as during this time, I saw the price of my Muni funds more than double, and this in the face of making a whole lot of mistakes early on that caused some capital losses. But thankfully, I quickly learned from the mistakes and carried on with success (so far)
.But am sorry to hear about your experiences in the 80's as I was not in Munis at that time, so could relate to my early days (when I had losses) with what you had gone through.
Again, perhaps we are getting off topic.
Just for disclosure, I do have money in Bank Direct.
Cheers
Last edited by sharka; Apr 2, 2011 at 9:15 am
Apr 2, 2011, 9:12 am
#200
Join Date: Aug 2006
Posts: 756
Are you getting an exception from Fido on the bonus miles? I thought they only offer it to New Accounts. I had to fight hard to get them making an exception a few years ago when bring in new funds to existing account. And they would not do it the second time when I asked for UA miles for new money a year and a half later. They claimed it was a Lifetime bonus for a Household account.
Though 50K for 200K new money is pitiful - it translates to 0.0025% for your money at 1cpm.
Fidelity's FSLXX now is paying less than a regular checking account in some banks, including the banks used for mySmartCash.
Though 50K for 200K new money is pitiful - it translates to 0.0025% for your money at 1cpm.
Fidelity's FSLXX now is paying less than a regular checking account in some banks, including the banks used for mySmartCash.
Happy, call Fidelity and give it a try. It does say it covers "New Money"
Promotional Offer Rules:
For a limited time, Fidelity Investments is making this promotional offer available to individuals who open a retail Fidelity brokerage account, or existing customers who add new money to an existing eligible account, and meet the following eligibility requirements. This offer expires February 14, 2012 and it is not transferable or valid in conjunction with any other Fidelity promotional offer. Fidelity Investments reserves the right to modify, change or alter the terms and conditions of the promotional offer in its sole discretion at any time. Fidelity Investments may terminate this promotional offer at any time. Other terms and conditions may apply.
Prospective customers who currently do not have a Fidelity retail account, and existing customers who add new money to a non retirement brokerage account, are eligible. This promotional offer is limited to one per household during the offer period for the individual(s) named on the Fidelity account. Only individual or joint Fidelity Accounts are eligible.
Apr 2, 2011, 3:18 pm
#201
Join Date: Apr 2010
Location: SFO bay area
Programs: UA 1MM, AA EXP 1MM, Hyatt Plat, Marriott Gold, Hilton Diamond
Posts: 1,729
Sounds fair enough--^
Just got off the phone with them--for those that have 2 acct already you will be grandfathered and can keep 2 feeding one AA number with both getting the 100 miles for $1000 per month up to the $200,000 level and then the reduced amount over $200k. For new customers there apparently will be some new rules in that you are limited to 2 accts per "household" total and only 1 can be a mileage checking and therefore the other would have to be a cd type mileage acct, etc...
Just got off the phone with them--for those that have 2 acct already you will be grandfathered and can keep 2 feeding one AA number with both getting the 100 miles for $1000 per month up to the $200,000 level and then the reduced amount over $200k. For new customers there apparently will be some new rules in that you are limited to 2 accts per "household" total and only 1 can be a mileage checking and therefore the other would have to be a cd type mileage acct, etc...
Is this now confirmed? (eg:those that have 2 mileage checking, can have up to $200k in each accnt at the old mileage earning rates...)
Does any one know for sure? Trying to decide how much to reduce the balances we've got there.
Apr 2, 2011, 3:25 pm
#202
FlyerTalk Evangelist
Join Date: Jul 2006
Location: Upper Sternistan
Posts: 10,087
I'd like to know this also - but I don't think I'll know for sure until early May. Nothing has really explicitly stated how they'll handle this situation.
Apr 2, 2011, 4:06 pm
#203
Join Date: Feb 1999
Location: Denver CO
Posts: 3,682
I am glad that Happy saved me the typing to point out that there is no similarity between an FDIC insured bank account (where your money and the stated rate will absolutely be returned at least thru the date of an institution's failure), and a bond fund which can lose part or all of its principal and interest.
Apr 3, 2011, 1:53 am
#204
FlyerTalk Evangelist
Join Date: Jul 2003
Location: Florida
Posts: 29,804
I am glad that Happy saved me the typing to point out that there is no similarity between an FDIC insured bank account (where your money and the stated rate will absolutely be returned at least thru the date of an institution's failure), and a bond fund which can lose part or all of its principal and interest.
I was complacent back then because the amount invested was rather small so the capital loss wasn't big in absolute $ term. However when one looks at it at percentage term as one should, the loss has been staggering.
Bond funds used deceptive advertising about "diversity" - true, the loss from default is minimize but the loss from interest rate going up is played down. Worse, there is no "wait till maturity" when it comes to bond funds and they never tell you that.
Apr 3, 2011, 2:10 am
#205
FlyerTalk Evangelist
Join Date: Jul 2003
Location: Florida
Posts: 29,804
Happy, call Fidelity and give it a try. It does say it covers "New Money"
Promotional Offer Rules:
For a limited time, Fidelity Investments is making this promotional offer available to individuals who open a retail Fidelity brokerage account, or existing customers who add new money to an existing eligible account, and meet the following eligibility requirements. This offer expires February 14, 2012 and it is not transferable or valid in conjunction with any other Fidelity promotional offer. Fidelity Investments reserves the right to modify, change or alter the terms and conditions of the promotional offer in its sole discretion at any time. Fidelity Investments may terminate this promotional offer at any time. Other terms and conditions may apply.
Prospective customers who currently do not have a Fidelity retail account, and existing customers who add new money to a non retirement brokerage account, are eligible. This promotional offer is limited to one per household during the offer period for the individual(s) named on the Fidelity account. Only individual or joint Fidelity Accounts are eligible.
Promotional Offer Rules:
For a limited time, Fidelity Investments is making this promotional offer available to individuals who open a retail Fidelity brokerage account, or existing customers who add new money to an existing eligible account, and meet the following eligibility requirements. This offer expires February 14, 2012 and it is not transferable or valid in conjunction with any other Fidelity promotional offer. Fidelity Investments reserves the right to modify, change or alter the terms and conditions of the promotional offer in its sole discretion at any time. Fidelity Investments may terminate this promotional offer at any time. Other terms and conditions may apply.
Prospective customers who currently do not have a Fidelity retail account, and existing customers who add new money to a non retirement brokerage account, are eligible. This promotional offer is limited to one per household during the offer period for the individual(s) named on the Fidelity account. Only individual or joint Fidelity Accounts are eligible.
They changed the language - it used to be one per household for "lifetime".
Idle cash has been leaving the brokerage firms with their interest rate at 0.05% or below when one can get 1% - while 1% is still pitiful, it is 20 times of the 0.05%.
I am not interested in 50K with 200K new money - the payout ratio simply is way too small. Or shall I say, the cost (losing interest earning elsewhere) is too high to acquire the pitiful 50K. Although I know others are playing tricks in making up the 200K over the required time frame. It is just not my preference.
Even if you do the In and out and assume Fido still not modify its system to stop that, you run $50K through Fido 4 times and parked it there each time for a month and 1/2 so it would not look suspicious. You are still losing $200 to $250 interest at a 1% account. That means you are paying 0.004 to 0.005 per mile - a reasonable price if you need miles but not a great price, especially not to folks who have over million miles in the household.
Last edited by Happy; Apr 3, 2011 at 2:15 am
Apr 3, 2011, 2:12 pm
#206
Join Date: Aug 2006
Posts: 756
I did this a few years ago. Got 25K with A LOT LESS new money.
They changed the language - it used to be one per household for "lifetime".
Idle cash has been leaving the brokerage firms with their interest rate at 0.05% or below when one can get 1% - while 1% is still pitiful, it is 20 times of the 0.05%.
I am not interested in 50K with 200K new money - the payout ratio simply is way too small. Or shall I say, the cost (losing interest earning elsewhere) is too high to acquire the pitiful 50K. Although I know others are playing tricks in making up the 200K over the required time frame. It is just not my preference.
Even if you do the In and out and assume Fido still not modify its system to stop that, you run $50K through Fido 4 times and parked it there each time for a month and 1/2 so it would not look suspicious. You are still losing $200 to $250 interest at a 1% account. That means you are paying 0.004 to 0.005 per mile - a reasonable price if you need miles but not a great price, especially not to folks who have over million miles in the household.
They changed the language - it used to be one per household for "lifetime".
Idle cash has been leaving the brokerage firms with their interest rate at 0.05% or below when one can get 1% - while 1% is still pitiful, it is 20 times of the 0.05%.
I am not interested in 50K with 200K new money - the payout ratio simply is way too small. Or shall I say, the cost (losing interest earning elsewhere) is too high to acquire the pitiful 50K. Although I know others are playing tricks in making up the 200K over the required time frame. It is just not my preference.
Even if you do the In and out and assume Fido still not modify its system to stop that, you run $50K through Fido 4 times and parked it there each time for a month and 1/2 so it would not look suspicious. You are still losing $200 to $250 interest at a 1% account. That means you are paying 0.004 to 0.005 per mile - a reasonable price if you need miles but not a great price, especially not to folks who have over million miles in the household.
Apr 3, 2011, 2:34 pm
#207
FlyerTalk Evangelist
Join Date: Jul 2006
Location: Upper Sternistan
Posts: 10,087
I've got two checking accounts over there, maxed out, going to my AA number.
So what do I do with the extra? I don't think I can open an MMA, can I? But I think the CDs don't count in the "2 per household" rule.
Am I right about this? If so, for money over $400K, the CD might be the next-best option.
Apr 3, 2011, 2:48 pm
#208
Join Date: Feb 2009
Location: SF
Programs: UA MM, AA 2MM, Bonvoy LTP, HH Dia
Posts: 1,132
Seems like an insanely good price to me (I would gladly buy 50k miles for $200-250), and I have well over a million miles in my household. That said, you're only getting 50k miles, and that's not worth opening a Fidelity account for me.
Apr 4, 2011, 12:42 pm
#209
Join Date: Feb 2011
Programs: AA PLAT FPC PLAT
Posts: 123
Usually mileage posts on the 2nd day of the month, so far it did not post for me.
Apr 4, 2011, 12:53 pm
#210
FlyerTalk Evangelist
Join Date: Jul 2006
Location: Upper Sternistan
Posts: 10,087
By the end of the second day, I can see miles posted on the BD site, as I can now.