An alternative to the Citibank AAdvantage debit card and checking account

I’ve mentioned before that I don’t like to write about mileage earning credit card or financial service offers.  The reasons:

• They change too frequently and it’s a challenge to track them all.
• There are several other bloggers that cover the subject far better than I ever could.
• It’s a boring subject.

Don’t get me wrong, I read some of the same blogs that you probably read, and I sign up for many of the offers too, but writing about them isn’t any fun (for me).

If I had to give any advice, it would be this: get a Citicard, a Chase card, an American Express, and fly a lot. Done.

However, I do cover the subject from time to time if I think it might be useful for others.  And that’s what I’m doing today, but before I get to the topic remember this: I don’t earn money or have any affiliate relationship with any bank or credit card company.   Also, you should carefully evaluate the merit of any bank or credit card offers and decide for yourself whether or not any particular one is right for you.

A couple of months ago I wrote about Citibank discontinuing their Addvantage debit – checking accounts.  I and others were sad to see the card go away.   And while I carry a Citi AAdvantage Mastercard and American Express in my money clip, and use both cards to earn miles, I’ve never liked using them for small purchases.

The reason why (and I suspect I’m a little old school in this regard) is that I prefer to track my spending using my checking account.  I receive electronic payments each month from software royalties and consulting fees, so for me, being able to view incoming and outgoing payments from one single site is far easier than following income and expenses through several different sites.

After Citibank discontinued their AAdvantage debit card, I figured I’d just have to start using my credit card more often, and learn to live with tracking my credit card accounts more closely, but then I remembered an offer I found a few months ago from a bank that was offering AAdvantage miles for debit card purchases.  From DepositAccounts.com:

Bank of Internet has launched UFB Direct with two products: an Airline Rewards Savings Accounts and an Airlines Rewards Checking Account. Both of these allow customers to earn miles/points. The feature that is most noteworthy is the interest rate of the savings account. It’s 1.30% APY for all balances (as of 8/4/2011).

At the time I decided not to write about it for a few reasons:

• As I’ve already explained, I don’t like to cover financial products and services
• I had never heard of UFB Direct bank
• And while I had come across the Bank of Internet name before, other than thinking “Bank of (the) Internet” was a better name, I had no opinion about them.

So I did a little research, and it turns out the UFB Direct has been around for a while.  There’s even a long dead thread over at FlyerTalk discussing them, and it turns out the the original UFB Direct was closed by the Office of Thrift Supervision in March 2010.   The Bank of Internet acquired the UFB Direct name and URL.  From MyBankTracker:

Some consumers may recognize UFB Direct as it was previously owned by Waterfield Bank, which failed in March 2010. Bank of Internet acquired UFB Direct at the end of 2010 in strategic move to pick up domains with market value, according to a Bank of Internet spokesperson.

I remembered Bank of Interent from the Dot Com era but had forgotten about them a long time ago, then I found this investment analysis buried in one of my RSS feeds.  From SeekingAlpha:

Before we get to the numbers, it’s important to explain some of the distinguishing aspects of BOFI’s business model. Bank of Internet is an internet bank, and the only publicly traded internet bank in the United States as far as we know.

At the core, BOFI is a relatively simple story. The bank has historically had commendable loan underwriting, and its current asset portfolio appears conservative and straightforward.

Finally, I decided to call the bank and ask a few questions. The customer service representative was helpful and friendly, and confirmed that they offered AAdvantage Miles (something that isn’t apparent online).  From the UFB Direct website:

Earn rewards for everyday banking:
1 mile/point for every $2.00 Point of Sale (POS) debit transaction posted to your account.

You’ll receive a one-time additional 1,000 Miles/Points after having a direct deposit totaling $1,000 or more in one calendar month.

Earning miles/points is automatic — when opening your account you just select your participating Airline and enter your Mileage Rewards number. Your airline miles accumulate as you use your debit card for Point of Sale (POS) transactions.

So I decided to open an account.

Opening an account online was an easy (though kind of creepy) process.  Easy, because all I had to do was provide contact information and a tax ID number.  Creepy, because as part of the verification process was asked to confirm some information that was presented to me in the form of five multiple choice questions.

For example: “Select the address that belongs to a relative”.  I was offered four addresses, one of which belongs to my sister.  While I know that this information probably comes from a credit report, it’s still a little surprising how much of our personal information is on file somewhere.

After I finished the verification process, I was given an account number, and then I funded the account with an electronic transfer from my Citibank account.

Anyway, I opened the account two weeks ago, and Friday I received my new debit cards (checking and savings). Incidentally, they’re branded “Bank of Internet” rather that “UFB Direct”.  The miles I earn with each transaction are supposed to be earned within 60 days after the end of each statement cycle.

I’m still planning to keep my Citibank account, though I may later decide to close it, and I’ll probably still end up using my Citi AAdvantage cards more often, but for now, my plan is to use my Bank of Internet debit card for all my smaller transactions (Starbucks, restaurants, car wash, dry cleaning, and American Airlines inflight snack purchases).

Remember, this isn’t an endorsement, I’m not advocating or suggesting that anyone open a UFB Direct or Bank of Internet account.   I’ll keep you posted and let you know how it works out.

Photo credits
Santa Air Express – by Doug Waldron on Flickr
Bank of Internet Visa Debit Card – by AAdvantage Geek on Flickr