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Are 50,000 miles from a BankDirect or Fidelity account worth parking your cash?

by on Wed April 2, 2014 • 7 Comments

Fidelity Miles

If you’re fortunate enough to have extra cash lying around you’ve probably given some thought to offers out there to earn bonus miles by keeping your cash parked in a checking, savings, CD or brokerage account.

BankDirect offers American AAdvantage miles for checking accounts and CDs at the following rates (click here for details):

Checking Accounts:

  • First $50,000: 100 miles per $1,000 per month (60,000 earned / year @ $50,000)
  • After $50,000: 25 miles per $1,000 per month (75,000 earned / year @ $100,000)


  • First $50,000: 250 miles per $1,000 per 6 months (12,500 miles / 6 months @ $50,000)
  • After $50,000: 25 miles per $1,000 per 6 months (14,000 miles / 6 months @ $100,000)

Fidelity offers bonus American AAdvantage and United MileagePlus miles at the following levels when you add money to an account (click here for details (AA) (United)):

  • $100,000: 50,000 miles once after 9 months
  • $50,000: 25,000 miles once after 9 months
  • $25,000: 15,000 miles once after 9 months

These are tempting numbers, and in the Bank Direct case there is no limit to the number of CDs you can earn miles on, so you could open several $50,000 mile CDs every 6 months and accrue hundreds of thousands of miles a year. With Fidelity you can move funds in and out once per year to get the bonus.

But is this a good deal?

First, you should only do this with your short term cash. You’re always going to be better off investing longer term cash in a diversified investment portfolio (not that you didn’t already know that).

But compared to the paltry savings and CD rates on cash available today, how does earning miles compare given the Fidelity and Bank Direct CD options require you tie up your cash for 6-9 months?

We ran the numbers here based on the highest savings account rate we could find – about 0.89% at Ally Bank and the highest 1 year CD of 1.05% from GE Bank. For money  in Fidelity accounts we assumed you chose a CD for 6 months.

The short answer. If you don’t value your miles at more than one cent each (30,000 miles = $300 ticket) don’t bother, you’re better off earning cash. You can see the results below valuing miles at one cent each, and even with the bonus miles you won’t earn much more than the 1% you can earn from a full cash account.

Product$ InvestedMiles EarnedInterest less feesValue of MilesTotal EarnedAnnual Yield
GE Bank 12 month CD$50,0000$525$0$5251.1%
Ally Bank Savings$50,0000$445$0$4450.9%
BankDirect 24 month CD$50,00050,000$100$500$6000.6%
BankDirect 12 month CD$50,00025,000$50$250$3000.6%
BankDirect 6 month CD$50,00012,500$25$125$1500.6%
Fidelity - 9 months in CD$100,00050,000$350$500$8501.1%
Fidelity - 9 months in CD$50,00025,000$175$250$4251.1%
Bank Direct - Checking account$50,00060,000($139)$600$4610.9%
Fidelity - 9 months in CD$25,00015,000$88$150$2381.3%

But if you can make a case to value your miles at two cents or more (30,000 miles = $600) then you’re generally better off earning miles with BankDirect checking or the Fidelity new deposit bonus. You can typically justify that if you redeem for big international or business and first class trips. Here’s how the options stack up if you value miles at 2 cents each:

Product$ InvestedMiles EarnedInterest less feesValue of MilesTotal EarnedAnnual Yield
GE Bank 12 month CD$50,0000$525$0$5251.1%
Ally Bank Savings$50,0000$445$0$4450.9%
BankDirect 24 month CD$50,00050,000$100$1,000$1,1001.1%
BankDirect 12 month CD$50,00025,000$50$500$5501.1%
BankDirect 6 month CD$50,00012,500$25$250$2751.1%
Fidelity - 9 months in CD$100,00050,000$350$1,000$1,3501.8%
Fidelity - 9 months in CD$50,00025,000$175$500$6751.8%
Fidelity - 9 months in CD$25,00015,000$88$300$3882.1%
Bank Direct - Checking account$50,00060,000($139)$1,200$1,0612.1%

In this case the Fidelity bonuses and holding a Bank Direct checking account with $50,000 in it are good deals, about twice as good as the best cash rates. But going above $50,000 isn’t a great idea since you’ll only earn 1/4th the miles above that threshold, and the BankDirect CD mileage rates aren’t attractive enough to earn you much more than a 1% all-cash CD.

What about taxes?

The good news is BankDirect and Fidelity historically haven’t sent 1099 forms to the IRS for the ‘interest’ earned on miles. So that offers a 30-40% advantage for the value of miles over getting your interest in the form of cash, though everyone’s tax situation is different.

The conclusion is if you can put your miles to good use for something better than 1 cent each it’s pretty easy to make the case this is a good use of the cash you aren’t ready to invest. And if you travel frequently that’s worth considering.


The following two tabs change content below.

Chase Sapphire Preferred® Card

Miles dont expireas long as card is open
Learn more

Partner Offer

50,000 bonus points

Intro Offer

$0 introductory annual fee, then $95

Annual Fee


Foreign Transaction Fee Waived


Points Can Transfer to Airline Miles ?

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7 thoughts on Are 50,000 miles from a BankDirect or Fidelity account worth parking your cash?

  1. Tim

    I am working with only $50k. Is there a way that you can see to get both the Fidelty signup bonus AND put money into the BankDirect account?

    I was wondering if there is a minimum amount of days it must stay with Fidelity or if I can put the funds in there and transfer it to Bank Direct after my points are posted?

  2. Josh

    Great analysis! I appreciate the chart you put together. I had a couple of questions:

    Are the bank direct CDs FDIC insured?

    You also mentioned in the article that you can open an unlimited amount of 6 month Bank Direct CDs. Would it make sense to invert in 5 or 6 of these CDs with 50k in each?

    Thank you in advance!!!


      @Josh – Yes, CDs are FDIC insured. You can have up to $250k in FDIC coverage per bank. The 6 month CD effectively earns 41.7 miles per $1,000 with a $50,000 deposit.

      The money market earns 50 miles per $1,000 per month, up to $50,000. And the checking earns 100 miles per $1,000, up to $50,000.

      So to get the most miles out of $250k from BankDirect, open a checking account with $50k, a money market with $50k, then open 3 6-month $50k CDs.

    1. MileCards

      @tly – Good point, there is a $12/month fee on BankDirect ($144 per year). That takes the yield at 1 cent a mile down to 0.92% and for 2 cents a mile to 2.12%. Similar conclusion though.

  3. David P

    I have too much lying around in BankDirect from the old days when they gave more miles. Time to look at Fidelity.

  4. Robert Dwyer

    Nice analysis! I’ll have to look more closely at the BankDirect option. I like the Fidelity play because you can transfer mutual funds in (without liquidating them) and enjoy potential growth while they’re resting there. No opportunity cost that way.


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