Monthly service fee coming to Bank Direct mileage checking accounts?

Given the low interest rates, one of the better “risk-free” places to park money has been with Bank Direct in a mileage checking account. You earn 100 miles per month for every $1,000 of the monthly average collected balance in your account. That means you earn 1,200 miles per year, and at 1.5 cents per mile that’s about a 1.8% return tax free, so to many that’s the equivalent of ~2.5% interest.

I’ve been late to the game and only opened a Bank Direct account earlier this week, though the funding went through and I received my welcome kit. While browsing FlyerTalk this morning I came across this post, where a FlyerTalk member posts a letter he received from Bank Direct stating that as of January 2012 mileage checking accounts will be charged a monthly service fee of $12. Oddly no one else has posted saying they received the same letter, so as of now I wouldn’t quite put this in the “confirmed” category yet.

Well, that would royally suck, though might just be my luck. While this probably won’t change the strategy for those with $100K+ parked in a Bank Direct account, for those with smaller balances this may be a reason to reconsider. This is especially true since a lot of people accrued AAdvantage miles through Bank Direct for lifetime status with American, and the ability to do that ends on December 1.

Comments

  1. FAQs on BankDirect website still say:
    Are there any fees on your Mileage accounts?
    There is no fee for Mileage Checking Accounts with balances greater than $2,500. For balances less than $2,500, there is a $15.00 monthly fee. On Mileage Money Market Accounts, there is no fee for balances greater than $10,000. For balances less than $9,999.99 there is a $15.00 monthly fee.

  2. I haven’t gotten a notice yet. Would love it if this applies to new accounts only. I’ve been a happy BankDirect customer since July 2003. I’d really rather not have to think through the value proposition, and changing banks is a pain…

  3. Just checked their site:

    Please Note: Monthly fees on transaction accounts will be WAIVED with a minimum combined average ledger balance of $25,000.00 in any combination of a Money Market Account, Checking Account, Savings Account, or Certificate of Deposit.

    as long as you have more than 25k, you are fine.

  4. Just did the math for myself. Right now I buy AA miles at 1 cent (I basically have a friend who would otherwise invest $125K in a taxable FDIC insured account put his money in BankDirect account and I pay him for the miles). Win win as he gets a 1.2% tax free return and I get miles at 1 cent. Adding $144 of fees increases my cost to 1.1 cent per mile (assuming a balance of $125K). Still worth it to me even if they add fees.

  5. Thanks for the heads up Ben. We have had our BD accts for 20 months–key reason I reached LG status this month..won’t like the monthly fee but will keep our BD ckng accts.

  6. I have seat 83H on my Luthansa flight next year…are you happy with 82C? Which seat number is better or does it matter?

  7. Its true! Received letter today, dated 11/30/2011, that monthly service fee of 12.00 per month starts January 2012.
    Still a good deal for large balance acounts.

  8. got the letter today as well. With a $200,000 balance you are foregoing $1800 in annual interest (.9% at Ally Bank or American Express Savings Bank) and paying $144 per year. This balance earns 240000 miles per year. Accordingly, in my mind, it is still a worthwhile deal. When interest rates go back up (someday one hopes!), I will reevaluate the value of this account. I am guessing that with interest rates so low, BankDirect is losing money on folks with large account balances.

  9. I, too, just got the bankdirect letter and immediately sent them the following online message. Feel free to copy and use if you like.
    ——–

    Hello,

    I just received your letter announcing that you’ll be charging $12 per month for mileage checking accounts starting in January.

    You may want to reconsider as your mileage checking product is what differentiates you from the rest of the market and is the only reason you’ve got my business.

    To be perfectly clear, if you begin charging me $12 per month for mileage checking, I *WILL* close my account with you and move my money elsewhere.

    Thanks.

  10. look, its website says it charges $12 monthkly fee, regardless of your balance or direct deposit.

    Account Level Annual % Yield Monthly Fee
    Mileage Checking Under $2,500 0.00% $12.00
    Mileage Checking Under $10,000 0.01% $12.00
    Mileage Checking $10,000 and Greater 0.01% $12.00

    100.00 minimum opening balance
    Interest compounded (credit method) daily
    Interest paid on collected balances
    Account closed within 90 days of opening are subject to a $15.00 close out fee per account

    http://www.bankdirect.com/products/checkingmileage.aspx

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