Capital One Bank Rewards Money Market 0.65% APY + Miles

Capital One Bank has a pretty intriguing offer right now to earn a pretty good competitive rate as well as miles. Kind of like double dipping on your money. The program is being offered through Capital One Bank’s Rewards Money Market Account.

Per the current terms, money will earn currently 0.65% APY. In addition, deposit at least $500 within the first month and receive 2,500 Capital One miles. Plus, for every $20 in the account (calculated on your average daily balance), one can earn an additional mile each month. So by stashing $10,000 in an account, one would earn $65 plus 8,515 miles over the course of a year. Not a bad return.

First thing to note, this is a money market account. Therefore, you are limited to the amount of transactions you can make out of the account per month, typically six (6). Any more and you can be charged a monthly fee and/or risk account closure. Therefore, the money market account is meant for savings, not your normal checking account with debit access.

While there are no monthly fees or minimum balance requirements, there are your typical stop payment fees, etc. listed in the disclosures. What I have not been able to locate is an early closure fee; it does not look like there is an early closure fee, which is great, but this product really is geared more for keeping the account open rather than opening for a large up-front bonus.

Now for the good part. Besides the pretty good interest rate, the miles. What are they good for, since they are not related to a particular airline? The miles collected are points in the Capital One private system. Rewards can be used for cash, gift cards, miles, and other various options. See www.capitalone.com/nohasslerewards for the complete program.

There is also an option to be able to transfer the miles to other airline programs, I presume, per this statement; “You can also transfer your rewards between your Rewards Money Market Account and other U.S. Miles or Points accounts.” However, you will have to review the complete details at the No Hassle Rewards website.

The best value for redemption of miles appears to be when you use them for travel, at a ratio of $0.01 per mile.

Miles Free Travel
15,000 Travel up to $150
35,000 Travel from $150.01 to $350
60,000 Travel from $350.01 to $600
100x the travel price Travel more than $600

The problem though is that you need 15,000 miles for redemption towards travel. Even with the $10,000 on deposit for a year example, it would take almost two years to acquire enough miles for redemption. That part right there is enough to scare me away from opening an account. I was debating about putting our sons savings account money into this program, and even though the interest rate is slightly better than they earn now, I do not think the mile “extra” is enough to lure me over. In addition, I would need to open up two separate accounts, which could be linked to the same rewards account, but they only allow one account per person. I do not want to open them up in their names just yet as I do not feel completely safe doing so while they are so young.