I believe he asked for 5%. up to 25k max really limits gains especially when considering 180 debit card transactions are needed to earn that rate.

As you know rates change. 4% is about the rate right now on those rewards accounts

4 days ago the rate was 5%. What was the name of the financial institution? Maybe someone would be interested in earning 4% for a few days before they lower it to 3%. ;)

In my experience, rates have slowly moved lower. I was earning 5.2% about 3 years ago, now I am getting 3.65%. I expect the decline to slow down even more, so that rate may hold for many months or even a year.

Scroll back to post 23 for a link to site which tracks these promotional checking account offers:

http://www.flyertalk.com/forum/13876352-post23.html

The highest rate is still 6.01%.

Thanks for the link to that website. But I noticed that the highest rate available nationally is 4%. The higher rates all are available only locally.

I will ignore the sarcasm. I think that at 6% ($1,500 before taxes on $25K deposit) or even the general 4-5% I was using, most people will benefit a lot more on an annual basis than by getting 30K miles from BankDirect. With that said, to get the 4-5-6% one has to comply with the rules so it may not be for everyone.

BankDirect loophole?
 

We've sidetracked a bit away from the topic of "Miles for Large Bank Balances".

I noticed that BankDirect gives a full month's-worth of miles for the first partial month that you open up a new account with a deposit. This must be a glitch in their software, or they are really lazy to not fix it.

Miles get credited on the first of every month. The number of miles credited is based on the average balance for the month but seems to be independent of the number of days in the month that the balance has been there. As an example, if you deposit $250k on May 27, on June 1 you will get 25k miles. The 25k is not pro-rated for the partial month. If you had instead deposited the $250k on May 1, you would have gotten the same amount of miles (25k miles).

Another theory is that they're aware of this and doing it so that they can claim that the miles aren't really taxable interest for their customers, but rather a monthly bonus reward. I admit this is farfetched but I'm still surprised a glitch like this can exist.

For those who don't want to reach for the calculator, 25k miles at just 2cpm in 5 days works out to an annual rate of 15.7% interest on $250k. At 3cpm, you can start feeling like a credit card lender.

In a practical sense, you can't reinvest at this high rate every day of course. But, if one really wanted to maximize this, I suppose one could keep their money in one of the 4%-5% checking accounts for nearly the entire month, then transfer the cash to a newly-opened BankDirect account right at the end of the month. Yes, this would be a lot of hassle but my guess is that anyone who's willing to jump through all the hoops for the 4-5% accounts, won't mind one extra hoop to basically double up their interest. This would probably work until BankDirect starts wondering why you keep opening up new accounts each month.

By the way, I am not speculating here. I have opened up two new accounts at BankDirect, each at a separate time. In both cases I got a full month of miles even though my money was there only a few days. I plan on leaving my money there so I won't be exploiting the glitch but I thought I'd post it and see if a "Churning BankDirect accounts" thread develops on FT in a few months :D

I'm pretty sure they limit you to two mileage-earning accounts total, ever, so while an interesting idea, this wouldn't work for long.

You must be special. That's not the way my miles were credited for my first month at Bank Direct OR any subsequent month. I got miles for my intital deposit as follows:

Deposit x 0.1 mile per dollar x number of days that deposit was at Bank Direct / number of days in the month

That is interesting. I wonder what caused the difference in the outcomes. Did you open up a Mileage Checking account or one of the other types?

If they're giving you credit for a full month with just 1 day deposited, then wouldn't the best thing be to just keep your two accounts open and transfer all the money between them once per month? Basically doubling the amount you earn on your balance?

EDIT - although upon re-reading the post it seems that if you had $100k in your account the entire month and it was withdrawn the day before the month ended you would get nothing?

Mileage Checking.

By the way, I was on the opposite end of the spectrum as far as timing of deposits. My initial deposit hit Bank Direct on the 2nd, and I still did not get miles equal to (Deposit x 0.1). It was pro-rated.

I am sure you would get something but it would be pro-rated. The loophole I was describing would only work on the first partial month. But, it sounds like it does not work universally for everybody.

While we all on this forum do like to game the deals to maximize our miles, let's not lose sight of the fact that the BankDirect deal is one where both sides are happy: they're happy for our deposits, and we're happy for the miles.

While I don't understand how it makes economic sense for them, they continue to offer it and for that, I'm grateful.

This isn't like the Mint deal, or churning Citi cards where we're working the system. This is the unique deal where both sides have their eyes open and come away happy.