In this 2012 article, I discussed the Bank Direct American Airlines program which was a one-of-a-kind account that enabled depositors to earn as much as 240,000 American Airlines Airmiles a year on deposit balances of $200,000. Depending on your use of the miles, many depositors had found that this compares favorably with the returns on online and branch savings accounts. Even after the implementation of a $12 monthly service change in early 2012, the program remained interesting for those depositing close to the $200,000 limit; those depositing much less found that the charge and the forgone interest ate away the value of the American Airlines Airmiles.
Effective June 1, the terms of the program will change dramatically. Bank Direct will only be giving 100 miles per month per $1,000 deposited on your first $50,000 deposited, and 25 miles per month per $1,000 on all amounts over $50,000. A $200,000 deposit will now earn no more than 105,000 American Airlines miles, fewer than half of the amount previously awarded. Given that you can now earn this many miles by opening a Citibank credit card, it hardly makes sense anymore to tie up your money in an account where you are basically buying miles at $12 a month and foregoing interest.
While American Airlines has averted bankruptcy, it has also agreed to a merger with US Airways. Its miles have already become less valuable due to decreased availability of "Saver" awards on most domestic and international routes. If it follows Delta's precedent, the merger will render its miles close to worthless.
In short it is foolhardy to stay with Bank Direct. It is time to move your money to an interest bearing account.
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