Is it safe to park $75k at BANKDIRECT.COM ?
 

I am looking for 75k AA miles for a free LAX- BOM return by AA/BA.

Sure, it is FDIC insured. But the rate is not very good (I assume you are looking at a 2-year CD, which is 2.75%

You will be effectively buying AA miles @ 2 cents per mile, as "regular" (not earning mileage) 2-year CD at Bankdirect.com is 3.75%, full 1% higher. On $75K, 1% difference in interest equals about $1,500 (actually, a tad more due to compounding). Somehow, that "free" ticket to India does not appear to be free anymore...

U guys are right..parking for 2 yrs at low rate is not good enough.i might as well get LAX - BOM return for around $1100 thru discount agents..

While the AA plan may result in $1500 less interest, frequent flyer miles are not taxable income (while the $1500 is).

But then again, on the money left after taxes, you can buy a ticket and earn more miles on it (not taxable too!)... http://www.flyertalk.com/forum/wink.gif

It is possible that a $1000-$1100 ticket on BA may not earn miles - I once had a ticket in that price range which was a consolidator fare ineligible for BA miles.

Personally, I think that the Bankdirect checking account which pays 0.5% interest + AA miles is better than a 2 year taxable CD (with or without the miles). That assumes that Bankdirect will continue to give the miles on the checking account next year - which may or may not happen.

[This message has been edited by PG (edited 07-29-2002).]

Although miles are not taxed as income, this benefit is often more than offset by the fact that they don't spend as easily as cash.

Park your money instead at gamblewithSpiff.com . No miles are available, but drinks are usually on the House and you get to choose between "Pass" and "Don't Pass".

debo_nair:

Are you sitting on a mountain of cash, or what?

http://www.flyertalk.com/forum/Forum1/HTML/006942.html

If you have a little extra floating around, my Uncle Vito still has some "investment opportunities".

Spiff: is your .com a subsidiary of Bank of Spiff? Nice to see some serious funding behind a .com for a change...

Our dot-com is related to Bank of Spiff, only while it remains solvent. After that, there is no relation.

The miles + .5% at BankDirect is good. I personally have a milage BankDirect account and use it for all my checking and have been occasionally leaving sums around 100k for periods of time. It is FDIC insured and is an internet front for Texas Capital Bank.

A better deal I've discover thru other FlyerTalk posts is an account at TD Waterhouse. Open an account with 50k and put it in their AA Milage Money Market. It is a slightly better deal than bank direct, 1 mile per $10 per month plus .77% interest. But the real benefit is 25k bonus AA miles after the account has been open for 6 months. So after six months you have 55k miles plus $192. I've opened an account for me and one for my wife. Tax-free miles are worth more to me than a little more interest.

http://www.tdwaterhouse.com/aolaa/index.html

from the aa website:

For investors interested in earning AAdvantage miles, the three American AAdvantage Money Market Mileage Funds credit your
AAdvantage account each month at an annualized rate of one mile for every $10.00 maintained in the funds. The funds are available
only to individuals and certain grantor trusts.

the above talks about an "annualised rate" of one mile per $10 maintained, not a monthly rate. has the promotion changed? were you actually awarded 30,000 miles for keeping $50K in the mileage fund for 6 months, or was your illustration a hypothetical?

thanks

Just out of curiousity, have you considered doing it the other way round (which is actually 20 miles shorter in each direction):

LAX-HKG-BKK-BOM on CX?

It seems to need the same number of points (75K) and you could also have the benefit of stopvers in HKG and BKK (I think - I am new to AAdvantage)

Mea Culpa. I called TD Waterhouse to confirm and steven b you are correct about the Mileage fund miles, they are annualized. That will certainly change my strategy. I'll leave my cash in Bank Direct and move stocks to TD Waterhouse to collect the 25k bonus. Thanks for pointing this out.