Banking Relationships that Earn Points and Improve Benefits
Update: Some offers mentioned below are no longer available. View the current offers here.
When it comes to earning travel rewards, many points and miles enthusiasts pay great attention to credit cards, and little or none at all to other methods. However, focusing on just one strategy can keep you from maximizing your earnings. So today, TPG Contributor Jason Steele discusses banking relationships that can help you boost your loyalty account balances, avoid fees, and more,
Travel rewards have become one of the foundations of the credit card industry. From co-branded partnerships to celebrity endorsements, banks and card issuers put a lot of effort into marketing credit cards to travelers, so it should be no surprise that some of them are capitalizing on our hunger for points and miles by also offering rewards for their other products, such as checking and savings accounts. Just by banking, you can earn frequent flyer miles, cash back, and other discounts beyond what you earn by spending on a credit card. Similarly, in a kind of financial symbiosis, some credit cards also offer banking benefits like reduced or waived fees, lowered balance requirements, and more.
In this post I'll tell you about how you can increase your points earning through various banking relationships, as well as ways to improve those relationships by choosing the right credit card. In each case, I'll explain the deal and give you my personal recommendations on whether it's worthwhile. Read on to find out more!
Chase Exclusives
Although this offer used to be more generous, it still provides some valuable benefits for those who have the popular Chase Freedom card (No longer open to new applicants). Cardholders who have a Chase checking account receive a 10% bonus on points earned each year. While Freedom is marketed as a cash back rewards card, the points you earn can be transferred to the Ultimate Rewards program for those who also have a Chase Ink Plus, Ink Bold, or Sapphire Preferred, and then transferred to airline and hotel partners, as well as Amtrak Guest Rewards.
Recommendation: Chase Exclusives is a no-brainer for any Chase Freedom cardholder. You can earn 30,000 bonus points by maxing out the rotating bonus categories, which offer 5x points on up to $1,500 in eligible spending per quarter. Adding a Chase checking account would get you at least another 3,000 Ultimate Rewards points each year. Furthermore, Chase often offers cash sign-up bonuses for opening one of their checking accounts.
Citi American Airlines AAdvantage checking account
Citibank sometimes offers 30,000 or 50,000 American Airlines AAdvantage miles as a sign-up bonus for opening one of their checking accounts. Lately those offers have been targeted, but reports in this Flyertalk thread indicate that promo codes may work for others as well. Since the offer is also available in branches, you could visit in person to guarantee that you get the right offer. Note that Citi will issue an IRS 1099-INT form when you receive miles from opening a checking account (not a credit card account), and will value those miles rather optimistically at 2.5 cents each. Thankfully, there are ways to dispute their valuation.
Recommendation: This is a borderline offer, if only due to your potential tax liability. For example, if you pay a combined total tax rate of of 25%, and you pay taxes on Citi's 2.5 cents per mile valuation, you're going to pay 0.625 cents per mile. Certainly AAdvantage miles are worth more than that, but the hassle of opening an account and/or disputing the valuation makes this offer less attractive for many people, especially compared to a quick and easy credit card sign-up bonus.
Citi Prestige Relationship Bonus
Starting on October 18, 2014, applicants to the Citi Prestige card who have certain banking relationships with Citi will receive additional ThankYou Points, including a 15% bonus for Citigold accounts, or 25% for those with a Citi Private banking relationship.
However, you can still get a card before October 18 to qualify for the old terms (below) for another year, with bonuses of up to 50%.
In addition, the annual fee for Citi Prestige is reduced from $450 to $350 for Citigold customers.
Recommendation: A CitiGold account has a $30 monthly fee, so the bonuses are unlikely to be worth more than that. However, Citi will waive the monthly fee for those who a combined $50,000 balance on deposit or retirement accounts, $100,000 including investment accounts, or $250,000 on a first mortgage. So if you have a Citi Prestige and qualify for a free CitiGold account, it's worth opening one for this bonus and fee discount; otherwise the $30 monthly fee ($360 annually) won't make much sense.
US Bank Gold Checking fee waiver
US Bank has a major retail banking presence, and they offer several different checking account options, each with various monthly fees. Yet their Gold Checking package, which normally costs $10.95 per month, waives that fee for anyone who holds a US Bank personal loan, line of credit, or credit card account. US Bank offers a number of different travel reward cards, including the Club Carlson Premier Visa.
Recommendation: If you need a retail checking account and already hold a US Bank credit card, US Bank could be a good option to avoid fees. Similarly, if you already have a US Bank checking account and are paying monthly fees, you can easily save $132 a year by opening a US Bank travel rewards card.
UFB Direct Airline Rewards
This online bank offers a checking account with a debit card that earns one American Airlines AAdvantage mile for every two dollars spent in Point of Sale (POS) transactions. It also offers 1,000 miles as a one-time sign-up bonus. There's a limit of 120,000 miles that can be earned per calendar year.
Recommendation: Of course, this offer isn't as good as any of the Citi AAdvantage credit cards that offer one mile per dollar, but it's useful to those who routinely shop with merchants that only accept debit cards, or at gas stations that offer a reduced price for cash or debit purchases.
BankDirect Mileage Checking
BankDirect has been offering American Airlines AAdvantage miles for some time, although the terms have become less generous over the years. There are sign-up bonuses available to those who open a new account: up to 26,000 miles for those who use direct deposit, online bill pay, and the BankDirect debit card. Nevertheless, they now offer only 100 miles per month for every $1,000 on deposit up to $50,000, and 25 miles per $1,000 after that. There's also a $12 monthly fee, and at most 0.01% interest.
Recommendation: Skip it. The meager mileage earned, the poor (if any) interest rate, and the monthly fees will offset much of the value of these miles. If, for example, you had $25,000 on deposit, you'd earn 2,500 miles per month, effectively purchasing miles for 0.48 cents apiece. While that's a good rate (according to TPG's most recent monthly valuations) and the rate goes down as you approach the $50,000 cap, if you have tens of thousands of dollars laying around, you can do a lot better in almost any type of investment. Unless you value AAdvantage miles very highly, this deal probably isn't for you.
Bank of America® Travel Rewards Visa® card bonus
The Bank of America® Travel Rewards credit card offers a 10% annual bonus if either the primary applicant or a co-applicant has a checking, savings or individual retirement account with Bank of America, or any account with Merrill Lynch or U.S. Trust. The account only needs to be open on December 31 of each year in order to qualify.
Recommendation: Anyone who has earned a significant number of points in this program should certainly open at least a basic checking or savings account before the end of the year in order to realize this 10% bonus. Thankfully, the offer appears to be retroactive to the entire year. While the Bank of America® Travel Rewards Visa® card doesn't match the return of the new Citi Double Cash Card, the banking bonus puts the Travel Rewards card ahead of competitors like the Capital One Quicksilver Cash Rewards Credit Card.
Have you earned rewards with these or any other banking relationship? What was your experience, and what would you recommend to fellow readers?