Maybe I'm missing a step, but doesn't that assume you actually have an 100k worth of stuff you want to buy with a credit card. Unless you're buying coins or something, you can't just spend whatever you want on a card, right? I mean, if you buy $100k worth of furniture, yes you can get $2k cash back or 120k miles through SPG, but it doesn't make sense if you don't need $100k in furniture. Then you're just investing in a heavily depreciating asset.

The thing about BD is that it allows you to earn miles without needing to convert cash into something that isn't cash by purchasing it with a credit card. It allows you to earn miles just letting cash be cash.

You open a similar account with another bank

Just when I think that frequent flier programs might be on the wane, given the shortage of available seats and other factors, I read posts about giving up 5 cents per mile CASH for AA miles and taking out home equity loans to deposit in Bank One, also to earn AA miles.

The programs are safe.

I assume the rates at BD will be affected by the market rates. Once interest rates go up they are bound to raise their return rate or (fingers crossed) give more than .1 mile/$ a month. They are clearly buying miles for at most 1c each, it's a great deal for them too.

Well, they currently give .1 mile/dollar/month, and I don't expect that to change. They also pay interest (currently .05%) and I do expect that will change, but will never be competitive on its own.

Okay, here's my back of the envelope calculus -- I only see one wild card, which I'll mention momentarily.

I have roughly $280k that I'd just as soon keep in cash.

www.bankrate.com tells me I could get somewhere around 1.5% at the best money market/CD option.

That's $4200 over one year.

My math tells me this bank deal would net me 336,000 miles in that same year. I'll assume nil interest as that's practically what it is.

Now -- I fly internationally, and especially trans-Pac, I really want business class at a minimum. Looking at AA's all airline awards chart, I infer that I can book business class on JAL for 50k each way. That's three business tickets a year, on an itinerary where retail is typically not less than $5k, sometimes closer to $8k. Now, let's not forget fees and so forth -- I'd say $400 per redemption ticket. That gets me value of $15000 - $1,200= $13,800.

Seems, if using the miles this way, to be clearly advantageous. Now, the key question -- will I actually be able to book those flights, or will they be subject to some MileSaaver type capacity control? If so, can I guarantee getting tickets by doubling up? If I double up the miles, I can get one-and-a-half trips, which I still rate as worth $7500.

What if anything am I missing here?

Don't forget tax on the $4200 in interest as part of your comparison. Also, the 2X miles to get around MileSaaver capacity controls only works for AA metal, so if you are set on JAL, then you need to somehow factor that in.

Mango, I think you are on it. If you're going to park cash at these ridiculously low rates, you should at least get a couple of business class tickets.

Good points.

So if JAL says, nope, nothing available at the nominal 50k rate, am I just SOL and can't get a ticket at all? Is it clear that the oneworld awards are capacity controlled (I ask because the chart has symbols that would seem to indicate some are but others aren't)? See http://www.aa.com/content/images/AAd...dChart0909.gif

The FDIC insured amount is not per account! It's per depositor so as an individual you would be insure up to a maximum of 250k for both accounts (and any other account you have at this bank).

Like someone mentioned earlier in this thread the maximum protection you can have is $750,000 with a married couple since the accounts are named different.

1 account in husband's name, 1 in wife's name, and 1 joint account in both spouses' names.

I believe that one is insured for 250k in all individual accounts in which that person has an interest and 250k in all joint accounts in which that person has an interest. So, in the event of husband and wife with 3 accounts -- one individual each and one joint -- the total insured amount should be $1 million ($250k in each of the individual accounts and $500k in the joint account) so long as there is a basis for claiming each spouse's share of the joint account is $250k.

source: http://www.fdic.gov/deposit/deposits/insured/faq.html

I agree with your approach and logic. Valuing the flights you get is the tough part, and I compare other avenues to getting flights, such as purchasing upgrades with co-pays, when I'm writing on my envelope.

The part of your logic I like most is the recognition that you many not get the flights at a cheap level. Many people just blow off availability, thereby valuing a flight that is tough to set-up and often available only if you change your schedule, with a flight you can just walk up and buy a ticket for whenever you want. They aren't the same, unless you value your time and inconvenience at zero.

This is almost never a problem with AA (remember this is not DL, where your miles have very nebulous value). If JAL is not there, go on AA or CX, or even use the AAnytime awards on AA
It may cost you double for 200k points, but at a cost of 2000$ it is still cheaper than buying C at short notice. You can hold your nose about AA C being in the slums and pay more miles for it. You can even go on AS, QF etc.
The real comparison is between the after tax costs of interest earned and miles earned.

There are ways to earn nearly unlimited miles (limit only by loose cash available to do these things) at about 1.5- 2c per mile, this includes BD. All I wished to do was point out that ANYONE who gets a point is giving up the option of a cash back reward.
The sweet spot logically for me is an earning of 2.5% cash from interest.
Below that BD miles are better.
Illogically as I reach the 2MM mark I am hurrying it along, as I am afraid the opportunities will go.
This leads to thoughts of 100k home equity lines

ffI speak with twirling tongue.

???
 

I am interested in this. I can not find info on the BankDiect site. Anybody got a link that shows clearly how many AA miles you get for a account? I'll probably need a referral after looking at the site.
TIA.