BankDirect is an online banking subsidiary of Texas Capital Bank, which bills itself as “the best business bank in Texas.” Despite its provincial parent, BankDirect’s deposit accounts are open to anyone with a U.S. address. All accounts come with FDIC insurance up to $250,000 per account.
BankDirect’s defining feature is an affiliation with American Airlines’ AAdvantage travel loyalty program. Several of its accounts – including checking, money market, and various CDs – accrue “miles” points that can be redeemed for airfare through American Airlines and its subsidiary airlines.
Depending on how many mileage accounts you have and how much you use them, this program could earn you up to 2 free international flights, or 2 to 3 free domestic flights per year, and perhaps even more. You do need to be an enrolled AAdvantage member to earn and use these miles, but that’s not a big hurdle: the AAdvantage program is open to everyone, and is easy to apply to.
Beyond the mileage program, which is definitely a major perk for account holders interested in travel, BankDirect isn’t particularly noteworthy. In fact, it comes with some pesky restrictions, such as minimum opening deposit and balance requirements on all accounts, and hard-to-avoid monthly maintenance fees on some accounts.
This is your run-of-the-mill checking account. It requires a $100 minimum deposit to open and a $100 minimum balance thereafter. It doesn’t pay interest or come with a monthly maintenance fee. If you need checks, you can request your first order of 50 for free.
This account requires a $500 minimum deposit and minimum balance. The $15 monthly maintenance fee is waived if you maintain a daily balance greater than $2,500. Balances greater than $2,500 also earn interest: 0.05% APY on balances up to $10,000, and 0.10% APY on anything above $10,000. Checking with Interest reimburses third-party ATM fees (up to $2.50 per transaction) on up to 4 ATM withdrawals per month.
BankDirect’s Mileage Checking with Interest account comes with an account opening bonus of 1,000 AAdvantage miles.
Above the $50,000 cap, you earn 25 AAdvantage miles per month per $1,000 in deposits. If you have $100,000 in deposits, you’ll earn 6,250 AAdvantage miles per month: 5,000 per month on the first $50,000 in deposits and 1,250 on the second $50,000 in deposits. There’s no cap on the number of AAdvantage miles you can earn, though the FDIC limit of $250,000 per account is a de facto cap on your total balance.
additional perks include:
Mileage Checking with Interest balances above $2,500 yield 0.01%. There’s a $500 minimum opening deposit and balance, as well as a $12 monthly maintenance fee on all balances, with no way to avoid the fee. BankDirect limits customers to 1 mileage checking account per household.
Moving forward, your exact mileage earnings vary depending on your account type and activity. Still, BankDirect claims that checking account holders can “easily” earn 10,000 miles per year. Just remember that AAdvantage miles automatically expire 18 months after the most recent redemption date. As long as you redeem your miles for a flight at least once every 18 months, your remaining miles will last indefinitely.
There’s no monthly maintenance fee here, but BankDirect does charge $10 per withdrawal if you log more than 6 withdrawals in a given month – the limit for all U.S. money market accounts, not including ATM withdrawals. This account comes with a free ATM card and reimbursement, up to $2.50 per withdrawal, of third-party ATM fees on up to 4 such transactions per month.
The Mileage Money Market Account comes with a 1,000-mile account opening bonus, requires a $500 minimum opening deposit and $500 minimum balance, and a $10 monthly maintenance fee on balances less than $10,000. The maintenance fee is waived if you maintain a balance greater than $10,000. The yield is 0.05% on all balances above $500.
Mileage-wise, you earn 50 AAdvantage miles per month, per $1,000, up to $50,000. Then, you get 25 miles per month (per $1,000) above the $50,000 mark, with no cap on your total earnings. Like Mileage Checking with Interest, this account also comes with a one-account-per-household limit.
Term lengths on BankDirect’s regular CDs range from 90 days to 60 months. The yield structure is somewhat unorthodox, with the 90-day CD yielding 1.00% – better than most competing CDs with such a short term – but the 60-month yielding just 0.25%. With a 2.55% APY, the 36-month CD offers the highest headline yield.
There are 3 Mileage CDs: 6-month, 12-month, and 24-month. All require a minimum deposit/balance of $10,000. Though there are no monthly mileage awards (as with checking and money market), you do get a hefty one-time award based on your CD’s term and deposit size. This award ranges from 250 miles per $1,000 deposited (up to $50,000) for the 6-month CD, to 1,000 miles per $1,000 (again up to $50,000) for the 24-month CD.
Yields are low: 0.10% on all balances, regardless of CD term. Early withdrawal penalties are identical to regular CDs’. There’s no limit on the number of mileage CDs you or your household can have. BankDirect claims that CD account holders can earn, again “easily,” up to 50,000 per year, per CD.
BankDirect’s savings account has a $100 minimum opening deposit, $100 minimum balance, a 0.10% yield on all balances, and no monthly maintenance fee. Though it doesn’t automatically come with an ATM card, you can request one at no charge. For ATM card holders, BankDirect reimburses 2 monthly withdrawals, up to $2 each. There’s no monthly maintenance fee with this account.
Like money market accounts, savings accounts are also subject to a limit of 6 withdrawal transactions per month, not including ATM withdrawals.
BankDirect offers regular CDs and money market accounts that can be structured as traditional or Roth IRAs. The money market account, which requires a minimum deposit of $100, yields 0.10% on balances up to $10,000, and 0.15% on anything above $10,000.
CD terms range from 12 to 60 months, all yielding 0.25% on all balances. These IRA CD yields are significantly lower than many of BankDirect’s competitors. Another notable drawback: you can’t structure a mileage CD as an IRA.
BankDirect has a 24-hour, password-protected, automated telephone banking system that you can use to check balances and make basic modifications (such as PIN changes) to your accounts. Human customer support associates are reachable by phone from 8am to 6pm Central Standard Time, Monday through Friday.
BankDirect’s opt-in overdraft protection plan allows you to make transactions that result in a negative account balance. There’s a one-time fee of $38 for this service. If you don’t opt-in, transactions that would normally trigger overdraft protection simply fail.
BankDirect offers commercial financing for small and medium-sized businesses through an affiliate called BankDirect Capital Finance. BankDirect customers don’t automatically qualify for Capital Finance’s loans and lines of credit – you need to contact the affiliate directly. The term, principal, and rates on each loan and line of credit are customized based on the client’s financing needs and credit profile.
1. Mileage Perks Are a Major Differentiator
BankDirect’s mileage accounts definitely set the bank apart from most competitors. With attractive mileage bonuses, such as 10,000 miles for $2,000 in direct deposits per month, Mileage Checking with Interest offers tremendous earning power if you’re willing to use it frequently (or as your primary checking account). And with no cap on the number of Mileage CDs you can open, the miles can quickly add up on the savings side of things too.
Many popular online banks, including Ally Bank and Capital One 360, lack a mileage program altogether. For depositors with less than perfect credit, BankDirect may well be a worthy alternative to a premium travel rewards credit card.
2. CD Yields Are Better Than Some Competitors
Though BankDirect’s CD yields aren’t the best in the business, they’re definitely better than some other popular online banks. For instance, the 36-month CD’s 2.55% yield exceeds that of identical CDs available through EverBank and TIAA Direct.
3. Has Several IRA Options
BankDirect has special CDs and money market accounts structured as traditional and Roth IRAs. This is a nice perk if you’re looking to place some of your retirement savings in an insured account with a predictable yield. Some competing banks, such as FNBO Direct and BAC Florida Bank, don’t offer any retirement options.
4. Commercial Financing Available
BankDirect offers customers access to commercial financing through BankDirect Capital Finance. Though not all customers qualify for this perk, it’s certainly nice to have the option if you’re a small business owner who already does business with BankDirect. Other popular online banks, including FNBO Direct and Ally, don’t offer commercial financing options.
1. Savings and Money Market Yields Are Paltry
BankDirect’s savings account yields a paltry 0.10% on all balances. The non-mileage money market is arguably even worse, yielding 0.15% only on balances above $10,000. It bears noting that these yields haven’t budged since the early 2010s, when prevailing interest rates were much lower.
If you want greater yields on BankDirect’s savings products, you need to look to its traditional CDs, mileage CDs, or mileage money market. However, if you prefer less restrictive savings and money market accounts that pay cash (rather than miles), other banks are likely to be more attractive. For instance, EverBank’s money market yields 1.01% for the first year and 0.61% thereafter.
2. Maintenance Fees May Be Tough to Avoid
Some BankDirect accounts, particularly the mileage accounts, come with hard-to-avoid maintenance fees. In some cases, such as Mileage Checking with Interest ($12 monthly on all balances), they’re impossible to avoid. If you’d prefer not to worry about maintenance fees at all, no-fee accounts at Ally Bank and other competitors may be a better choice.
3. No Mobile App or Mobile-friendly Website
BankDirect doesn’t offer a mobile app, nor does it have a particularly mobile-friendly website. This is definitely a disadvantage for people who prefer to do their banking from a mobile device, and places BankDirect in a distinct minority of online and traditional banks that haven’t yet made the leap to mobile.
4. High Minimum Balance Is Problematic for CDs
BankDirect imposes a steep minimum balance requirement for regular and miles-earning CDs: $10,000. This is particularly problematic for regular CDs, which have good but not world-beating yields. Other banks, including Ally and FNBO Direct, don’t impose such an onerous minimum deposit on regular CDs.
With a one-time mileage bonus of up to 50,000 miles on the 24-month CD – good for up to 3 round-trip domestic economy flights – BankDirect’s Mileage CDs are definitely attractive to savers who can stomach the $10,000 minimum balance. But not everyone can afford to lock up $10,000 in a single CD for 24 months. If you have less to save, you may need to skip the Mileage CD altogether and look into a bank that offers traditional CDs at higher yields.
5. No Consumer Loans or Credit Cards
Though it does offer commercial financing options through BankDirect Capital Finance, BankDirect has no consumer credit infrastructure. If you need a home loan, auto loan, or cash back credit card, you need to look elsewhere. This is a disadvantage relative to better-known online banks, including Ally Bank (known for auto loans) and Capital One 360 (known for Mortgages and credit cards).
6. Limited Customer Support Hours
BankDirect’s customer support team is only available on weekdays during extended business hours. If an account issue that requires human attention arises over the weekend or late at night, you need to wait hours or days for Help. By contrast, other online banks such as FNBO Direct and Ally have 24/7 support, often with minimal wait times.
7. IRA CD Rates Are Much Lower Than the Competition’s
BankDirect’s IRA CD rates pale in comparison to IRA CDs found elsewhere. Both Ally Bank and Optimizer Plus by Synchrony Bank offer yields at or above 2% on longer-term products. It’s unclear why you’d want to open a BankDirect IRA CD when there are better alternatives.
Compromise is a fact of life – and, in some cases, online banking. BankDirect’s mileage program has the potential to be awesome for the bank’s customers, provided they’re willing to do what it takes to earn its juicy bonus point awards – and travel often enough (redeeming at least once every 18 months) that these rewards don’t go to waste.
Then again, I’m willing to bet that BankDirect would offer better yields, lower fees, and more flexibility overall without the mileage program. The bottom line is that anyone who’s considering opening an account here needs to look in the mirror and ask: Am I in it mostly for the miles, or do I want convenience, flexibility, and a top-notch customer experience?
Are you thinking about opening a BankDirect account?
Updated: August 30, 2018
BankDirect’s partnership with American Airlines’ AAdvantage miles program is definitely worth a close look for anyone who travels by plane, even occasionally, and lives near an airport served by American (which is most major U.S. airports). If you play it right, the miles program alone may be enough to justify a BankDirect account.
On the flip side, BankDirect has a lot of frustrating drawbacks, including high minimum deposits and maintenance fees on some accounts. If you don’t care about miles and prefer a no-frills online bank to handle your straightforward checking and savings needs, there are better options.
BankDirect‘s mileage program is a big perk, provided you’re willing to jump through some hoops. Solid CD yields and commercial financing options are useful too. But high minimum deposits for many accounts, pesky maintenance fees, and poor mobile functionality are big drawbacks.
Brian Martucci writes about frugal living, entrepreneurship, and innovative ideas. When he’s not interviewing small business owners or investigating time- and money-saving strategies for Money Crashers readers, he’s probably out exploring a new trail or sampling a novel cuisine. Find him on Twitter @Brian_Martucci.
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