TAXES TAXES TAXES. How quickly April comes and goes and I forget. I knew I was missing something. Thx

Ken in Phx

I'm not sure I completely understand what you are asking, but here it goes:

At ING, on $10,000, you should earn daily interest of $0.82 (10,000 x 3% / 365 days). If you don't withdraw the money, this daily interest should increase with compounding. If you withdraw it partially or completely, you only earn daily interest on your remaining deposited balance.

The comments above seem pretty straightforward -- so perhaps I have misunderstood your question about "gaining interest . . . based on longevity."

I've never invested in a bank that offers miles, but if their computations are based on average balances, you can't game the system by timing large deposits. Averaging will negate the timing effect. If the bank's computations are based on measurements on specific days (e.g., end of month), then theoretically, you could game the system by timing deposits and withdrawals. Someone else might be able to shed some further light on this subject.

I show you the math on my writeup of the deal in the Banking Section of the Finance page of my website, Free Frequent Flyer Miles. First coment: You would never invest $10,000 in BankDirect. You would stay near the minimum of $2,500.

I guess I thought leaving money in a bank longer somehow made it earn more but if I am to flip funds and can follow the advice of those who would just use say $2500, then I still have a bunch of change left over ($7500) to put into ING and get the best of both worlds!

thanks.
:)MM

Gary what would be the point ot having the account at all if you just got 250 miles a month. $2,500 daily balance would yield 250 AA miles/mo. I would think someone looking to collect AA miles might want as much as 100k in that account. that would be 10k/miles a month and a free ticket biz classs after 1 yr. Am I on the correct path here. Why bother doing it if its only for 250 miles a month?

Ken in Phx

Do we benefit from open the account thru' referal ?

There are referral bonuses so that's worth it alone, but I still dunno... I think you have to just have money already to wanna do this.

Maybe Gary's got an extra $2500 laying around that just generates this supposedly easy mile-income and if he really needs the money he can go get it and replace with new $$?? Who knows. I do not have an extra $2500 laying around, and nor do most people I know. I mean, we assume a certain level of income, lifestyle and propensity to consume when talking mileage in here with each other, but not everyone makes the same or has the same needs. I think the basic understanding is that people have steady income from one source or another, we like to travel, and we like to leverage our money against ways to get the best returns from it. If spending also generates miles we somehow feel complete. But there are limits and I guess it depends on what one is willing to spend, risk, move or let sit in an account generating either interest or miles. If the pay off for miles is greater than the actual cash return after all things considered, we again feel like we made out. Perhaps for some who can see it more clearly, it does. I think there is a certain threashold though, and maybe I am not there yet. That, I think, is what I am trying to discover in this thread. What is needed as my "base" to even make this worth while?

Another similar example of this would be when people did that Dash to the Gate thing with Delta. It was a simpler, more clear cut instance where you laid out $150 up front and could come home with more than 30k DL miles plus status on a hotel account too. It makes sense when looking at the fact that it actually worked, but when going in, many of us were wondering if it was really going to pan out and if it was worth it. If you just sit on the miles and never use them, it would be a waste. If you do redeem, it is worth it.

Some deals require investments that can pay off later, and some happen right away. I suppose the long-run ones require a higher income and much more patience.

Anyway, with this gig, I was once offered a referral by someone and his info is saved somewhere in my yahoo mail account, so if I ever got entice to actually do this bank direct thing I would contact that person, but right now, I aint convinced yet either so far...

:)MM

Yep, there is a benefit. Both parties get 1,000 bonus miles. PM me with your email address and name if you'd like a referral :)

So, there is no limit on the amount of miles I can earn?

Theoretically, if I got a million dollars together and put it in this account--

Thats 100,000 miles a month and 1.2 million at the end of the year?

That means I would be flying free forever just for keeping money in a specific bank--I suppose that would be weighed against the return on investment elsewhere.

edited out for horrendously bad math. :rolleyes:

Check your math?
 

I would suggest that 3% x 1,000,000 = 30k / yr. ;)

Let's try this again
 

For some reason, the math was off in the above example, so just in case you guys haven't already done it yourselves, here is a little more accurate picture (still overly simplistic as it does not take compounding and many other real world senarios into consideration):

1,000,000 at 3.00% at ING = $30,000
1,000,000 at 0.75% at BD = $7,500 + 1,200,000 Miles

40% Tax Bracket:
ING Yields $18,000 After Tax
BD Yields $4,500 After Tax + 1,200,000 Miles

Real cost of Miles = $13,500 (or $0.01125 per mile)

25% Tax Bracket
ING Yields $22,500 After Tax
BD Yields $5,625 After Tax

Real Cost of Miles = $16,875 (or approx. $0.014 per mile)

At just over a penny a mile, one could at least argue that it worth a look.

OK, out of stupidity, I want to say oops. My mistake on the math, I was working a few equations and obviously misfired with my numbers.

At .012 a mile, would someone be interested in earning 150k to take a flight 1st class to Tahiti or Australia for $1,800 out of pocket for travel?

Seems there are many options to buy miles at .004 or .006 a mile, which would be half that number?

Ken in Phx

Considering coach typically runs about $1400 to those destinations, $1800 for first class seems pretty decent. Not to mention Hawaii, which at just over $300 to upgrade from coach is a real bargain if you are in the Midwest or East Coast.

Other than wasting time on mileage runs (which is way more cost prohibitive than this option for many of us), where can one buy miles for .5 cents a mile? (no sarcasim intended, I am pretty new here and am slowly picking up tricks from all you gurus)

But on to the topic: it seems AA is perfectly willing to sell 1,000,000 miles and Lifetime Gold Status for $11,250 (and 2MM + Lifetime Platinum for $22,500). I would think many people would be interested in such deals. Since they are already willing to do it by virtue of this deal, maybe this could be a new Money Maker for AA? :D I would certainly think long and hard about upgrading for life.

1/2 cent a mile deals were VisaBuxx .004/mile (currently) and others in the past Charter One, Texas State Bank etc.

And as for life ( of course you mean life of the AA program, right ;)