Miles earned tax free?
 

Can anyone confirm if the mileage earned is indeed tax-free? Ideally, I'd love to hear from someone who earned BankDirect miles in 2009 and who got a 1099 for their interest income. Did BankDirect report the equivalent value of the miles as interest income somehow?

It seems like the miles are de facto interest income but if the bank isn't reporting it that way, and the IRS isn't complaining, then who am I to make a fuss? :D

I received a 1099 for the interest amount, but there was no mention of the value of the miles. BankDirect is great for a brainless accumulation of AA miles, so I park our business seasonal cash there for the winter. Also I pay out of the account for the CD's that I use my Credit card for.

JudyJFLA

Don't you think you will be better off with 5% interest on rewards checking account?

No, reward checking accounts are not for everyone. They may yield around 4% today but it's generally a hassle to maintain the required card purchases every month. Some people would rather just let their funds earn a return with no hassle.

At 1.2 miles per dollar annual yield she (and others) can easily beat the yield of a RC account (without even taking into account taxes).

Not trying to go OT, but can you tell me what checking account offers 5% on cash balances?

Most likely a checking account which requires 10-20 debit card transactions per month and is capped at a relatively small balance of $25k or so. If it doesn't have these restrictions and it isn't a bank on the verge of being taken over by the FDIC, I'd also be interested in learning the identity of this financial institution.

Bank of Asheville offers 3.65% up to 25000:
https://www.bankofasheville.com/80-ezchecking/

Asheville Savings Bank offers 3.75% up to $25,000:
http://www.ashevillesavingsbank.com/
It's a personal checking called The Best Checking

Southcoast Community Bank in Charleston, SC offers 3.25% up to $35,000:
http://www.southcoastbank.com/person...-checking.html

All require 10 debits per month and at least one direct deposit or automatic bill pay. Also, these rates are subject to change. In the last three years, these rates have slowly come down (were over 5% 3 years ago).

You can open up accounts at any of these banks online.

I would imagine that there are community banks in other cities that have similar offers. In my experience, interest rates at community banks are always higher than at national banks.

I have $$ at Emigrant.com earning a measily 1% on an annual basis. Let's say I have $100k, this would give me $1000 in interest earned per year. If I switch to Bankdirect AA money market (greater than 10k), i would get .10% interest, which at $100k will give me $100 of interest earned for the year. However, it would get me 2000 miles per month or 24,000 points per year. For the miles though, I lose $900 in interest earned... with this example $900 for 24,000 points does not seem worth it to me. THe cheapest ticket with points on AA is 25,000 points, which would not be worth $900.

Am I thinking about this right?

Nope, you are missing taxes. See this post.

Right thinking, bad arithmetic.

Your mileage per month is also off. You'd earn 5,000 miles per month on a money market account, but I don't know why you would go with that option. You could earn another 5,000 miles per month by using the checking account option instead and giving up $3 of after-tax interest income.

I see this is possible for Southcoast Community Bank, but not for Bank of Asheville...

Can I open an eZchecking over the Internet?
Currently, Bank of Asheville does not open accounts over the Internet.

https://www.bankofasheville.com/82-e...ked-questions/

That's strange. I have a friend from out of town who opened an account at Bank of Asheville, and had no problems doing so. I'll have to find out how he did it.

My post #97 is not all correct. Accounts at the Bank of Asheville and Asheville Savings Bank can NOT be opened online. You have to call the banks to initiate the account opening procedures and they will then mail you the forms.

4% interest:
- up to $25K,
- 15 Debit Card Transactions,
- eStatements,
- Direct Deposit.

https://www.cambridgesavings.com/pg_...spx?PageID=401

PM me for an additional $50 MC Gift Card when new account opened by referral.