Capital One Direct Banking - Rewards Money Market

Average Score:

•   Banking Requires Math, Sadly

  This is a reeeeeally interesting account (if you’re the sort of person that can ever find a bank account interesting, that is). For every $20 in your account, they’ll monthly give you an airline rewards mile.

  So let’s do some math, eh? Let’s say I’ve got $10K in the account all year. So I’d earn roughly 6K miles in a year, which translates to $90 worth of airline rewards (according to their site, which is a bit confusing around this point), which is the same as receiving an extra 0.90% APY on the account.

  Their current rate is 1.1% APY, and summing the stated APY with the effective-rewards APY gives us 2% APY, which is the best available money market account in the nation right now. Rates change, of course, but you can always run through the math above to see if this one’s still competitive. And I’d imagine it will continue to be that way.

  So if you are going to keep enough money in there to actually accrue the 10K miles it takes a to get a free flight, and you like free flights, this is an awesome account. The rewards “miles” can also be redeemed for cash, but at a lower rate than the airline miles (~effective-rewards APY of 0.6% instead of 0.9%). So if miles don’t interest you, I’d look elsewhere. But if they do, and you want a money market account, this account will be tough to beat.

  Posted by gmlaughlin -- Sept. 9, 2009