If I were in same situation I would do the same thing to book award travel from the idle account. People often forget about the flexibility on award tickets - that is a very valuable benefit when a change ticket fee is $150 for domestic and $250 to $400 for international.

Moving the "idling" miles to the active account that is aiming for life time status is probably a desirable move, too.

The concept of "Do the Math" does not mean just the basic calculation of cpm - it means "Do the necessary Analysis" in a broader sense, to see whether the benefits gained from buying the miles outweigh the "losses" with paying cash for the tickets. To me, this is an implied pre-requisite. It really is more than just a cpm calculation.

My bumper sticker says, "I DON'T DO IT BECAUSE I AM GOOD AT MATH."

My point is that once you have made up your mind that using award miles is the way to pay for your travel, you need to figure out the cheapest way to accumulate (or in your case, replenish) the miles. I think paying nearly $0.02 per mile is not that attractive of a deal unless you have exhausted all of the cheaper alternatives (credit cards, Fidelity, Ameritrade, BankDirect, etc.).

You are still buying 56K miles for $1100. All you are doing is redeeming the miles from your wife's account and then buying miles in your own account. Why don't you just redeem from your wife's account and then be done with it.

Beyond that you are just buying 56K miles for $1100 which is a bad deal IMO. Is it really worth $1100 to add 56K miles to your account. You should think about it irrespsective of your wife's account. Its obvious you should redeem the miles from her account. But from there why do you think you should buy miles?

Of those alternatives mentioned, you would still need to do a cost analysis on the brokerage accounts and the BankDirect method. On top of that, not everyone would qualify the brokerage deals such as Fidelity is very steadfast refusing bonus if you have existing Fido account. BankDirect works better for folks in high tax brackets. But even with such consideration, one would still need to use one's miles for high value redemption to justify the loss of interest earnings even in today's very low rate environment, especially if one already has a healthy balance of miles.

Hmmm. Food for thought Although I'm not sure that I would ordinarily redeem 50k miles, if they were in my account for $1020 worth of travel. 2 cpm is ok from my account, but not great. There are enough miles in my account for F or Buisiness travel abroad, and I will probably use them for such within the next 12 to 18 months.

I suppose what I'm saying is that if there were a way to transfer 50k from her account to my account for free, what I would do for the upcoming travel is buy the tickets with cash and keep the miles in my account. I would value the 50k in my account as worth more than the 2cpm, but not really in her account. By using her miles to book the travel, and getting miles in my account for an additional $85, I've essentially done exactly that. Haven't I?

The point you've raised though is a good one, and I suppose I must consider what I'd do with $1105 more in my pocket for future travel if I simply use my wife's miles for the tickets.

Well it sounds like you may actually value your miles at 2 cents a piece. So then I guess if you are buying 56K for $1100 it is a wash. But if you are going to buy miles why stop at 56K. You could buy 100 or 200K.

I think you should redeem the miles from your wife's account because as you said those re worth less than 2 cents each. The question then becomes, irregardless of the trip you are making does it make sense to purchase miles from AA at the current cost. IMO, the trip you are making and the miles you are taking from your wife should have zero impact on this decision.

How are you getting 56K anyways? isn't it 40K plus 12K bonus for $1000 plus $30 plus $70ish in taxes. So I see 52K for $1100. I haven't done the math but I suspect you would have been slightly better off buying SPG and converting those to AA when they had the 35% bonus.

Some thoughts in bold.

Lkar,

Have you considered buying BMI miles. The regular price is under 2 cents each. You can use cash and miles awards so you don't need that many miles and the cash portion is about 1 cent per mile so the award only cost about 1.5 cents per mile

Even better C awards are cheaper than AA. You can actually buy a C award to Europe for about $1075 cash. You also get free stopovers, and one way awards. Plus star has much better availability IMO. Only downside is fuel surcharges.

Since lkar is prepared to open his/her wallet and pay $0.02 per mile, the only decision that he/she needs to make is whether there are alternative ways to earn miles that are cheaper than $0.02 per mile and whether the effort to do so is worth the savings.

The "cost analysis" for a brokerage account bonus is whether or not the fee for transferring securities out of your old brokerage is more or less than $0.02 per mile in bonuses from Fidelity and TD Ameritrade. That's a pretty straight-forward calculation and shouldn't take more than a minute to do. (If you want to put some esoteric cost on the period of time when securities are in limbo and can't be traded or the immaterial interest that one foregoes during this time, have at it.)

The "cost analysis" for a transfer of funds to BankDirect is also a very simple calculation. Can you earn more than 2.4% after-tax in a liquid, risk-free investment? (By the way, this ignores all up-front and referral bonuses.) If you can, then keep your money where it is and pay AA $0.02 per mile. If not, BankDirect is a cheaper alternative.

What other "cost analysis" do you propose one do to analyze my suggested alternatives?

Wow -- had never really paid attention to BMI before. Just played around on the web site, and you're right -- the mileage awards and cash plus miles awards look great. Got some reading to do . . .

Indeed -- for my situation consider where my money would have actually been otherwise, I am paying 0.7cpm through BankDirect. I'm not that excited about paying for miles, even that this rate, when I have no specific use for them but I'll try it out for a bit and perhaps go for the million mile mark (though it sounds like that *may* go away soon).

And of course, as other opportunities come up it may stop being worth it, considering I'm already on the fence. Higher interest rates, more willingness to play the stockmarket or other investment opportunities makes a pile of cash being used for aamiles that much more expensive

I just found this out because I just did it this weekend. Needed tickets to Mexico and needed stopovers in both directions. BMI fit the bill perfectly because mexico is priced same as domestic US, and its the only airline I know of offering stopovers in both directions. The allowed PVR-IAH-DEN-EWR also so there is at least some leniency on the point of stopover.

Only a few things I can think of for caution:

You can only buy 24K miles per year. Though I think you can circumvent this by establishing a family membership or just redeem one ways and have a spouse, child or buddy also buy miles. Or just redeem every two years.

US and UA domestic F count as F awards and require 250% miles. CO is C and 150%. On my award I had to avoid UA and US or sit in coach.

BMI uses and Indian call center though I thought they were pretty good. They operate on london hours which means they are open 2am-2pm for me.

BMI does not hold award seats. I took a leap of faith buying miles that seats would still be there. Miles posted in about 8 hours at 9pm. I called call center at 2am when they opened and was able to book seats.

The "cost analysis" is NOT a straight cpm analysis as I already mentioned.

Fido would not work for folks who already earned the bonuses before, or who have existing Fido accounts. Fido is known to even turn down some people whose existing accounts were only 401K rollover accounts while the offer specifically said it is for regular brokerage accounts.

Ameritrade does require you to put the money (if you dont have assets to move over, or you do not want to move the assets over just for the miles sake) in the account for the specified duration. Else the miles are taken back proportionally. FWIW, I have Ameritrade account which I only give them the minimum $2000 so I can use the Real Time Streamline Quote Service for free. The trading activities are still done at the Fido accounts. $2000 at 2.4% a year would cost me $48 yet any decent real time quote feed would cost $20 and up per month - just for information sake - so the $2000 tied up at Ameritrade serves me well. However I am not willing to give them any more than that just for the sake of getting 50K miles.

BankDirect - if one already has a healthy balance of AA miles, there is no point to hoard it while given up the cash for other earning opportunities especially if one is in lower tax bracket. Hoarding miles with a calculated real cost, is never a good idea in my opinion because you do run the risk of devaluation.

That is where the "cost analysis" in a broader sense that I refer to - not just the simple way of looking at the cpm cost.

Like if someone already has 1 to 2 millions miles in his account, and said person is in low tax bracket, I do not see why he or she would still want to do the Bank Direct with his money - because the alternative could be, although not totally risk-free, use the money to buy a Blue Chip Name, High Dividend Yield stock that yields 4 to 5% dividend which is still taxed at a lower rate than ordinary income. Surprisingly in today's stock market, you can find those names quite easily. Of course, you would still be subject to the ups and downs of the stock market but choose carefully you would do fine even if we go back to a 2nd recession. I would not even go into using the money for trading which surprisingly is actually working with the market volatility. This is not for most people but would definitely be applicable to some who do trade the stock market. The return is far greater than your 2.4% after tax - for the whole year... It can be many times of that in a few weeks... but that is of course an entirely different subject.

Your thought is towards the right direction.

One key thing is - does one have an immediate need of the miles? If one already has a healthy balance, good for several r/t in premium cabins, I honestly dont see why one wants to pay calculated real cost to acquire more miles.

To recap for those other simple-minded folks like myself:

1. Even though there are numerous reports on the Fidelity thread that say otherwise, don't expect any bonus miles from Fidelity if you've ever had any relationship with them. (Nevermind that we've never established whether the subject of this whole discussion -- lkar -- has ever had any dealings with Fidelity in the past.)

2. When considering whether or not to take advantage of the BankDirect AA deal, one should not compare the foregone return of a similar investment, but instead, the correct comparison is to what one could "reasonably expect" to achieve in the stock market.

I can't wait for the next installment of AA Miles for Dummies. I've obviously got a lot to learn!