Miles For Savings: Instead Of Spending, Save for That Next Free Ticket; Capital One Announces Innovative Money Market Option

Here's a new concept in the never-ending chase for more miles, points, and credits that so many of us  collect in pursuit of free travel: Earn reward miles for saving money rather than spending it.  And then cash in those miles for airline tickets without annoying blackout dates or other restrictions.

That's the premise of a new program just unveiled by Capital One, who you may know best as the credit card company with the clever television ads starring David Spade as the guy who says "no" a dozen  different ways when folks call to redeem award points.  (The point, of course, is that most companies have all kinds of fine print and blackout dates on their rewards while Capital One's "no hassle" card doesn't.)

Turns out Capital One isn't just a credit card company--it's also a bank.  And to encourage customers to begin a money-market account--which is really just a savings account that allows you to write checks--the new Capital One Rewards Money Market account pays an annual interest rate of 4.66% while also giving you one mile for every $20 you keep on deposit each month.  While you can open an account with as little as $1, if you can make your first deposit $500 or more, you'll receive a 2,500-mile bonus to start.

Simply fill out a savings account application on line, and you're in the program.  You can withdraw your money via online transfers, checks, wire transfers and via ATMs.  Award levels begin at 5,000 miles, but the number of miles you need to cash in for travel depends on the retail cost of the itinerary you choose.  Cash in 12,500 miles for tickets valued up to $150; 25,000 miles buys you a ticket up to $350 in value; 50,000 miles earns a ticket worth up to $600.  For tickets that cost more than $600, multiply the price of the ticket by 100 to determine how many miles you have to cash in.  (So an $800 ticket would require redemption of 80,000 miles.)

How many miles can you earn?

It depends on how much money you keep on deposit and for how long.  Park $10,000 in a money-market account for a year and you'll earn $466 in interest (based an an annual percentage rate of 4.66%) as well as 8,653 miles.  Save $100,000 and you'll pocket $4,375 in interest and collect 86,530 miles at the end of a year.  You may redeem awards anytime, and there are no blackout dates or other nagging rules that so often trip us up when we try to cash in miles directly with airlines. 

Footnote: You can cash in the miles you earn on your money market account for merchandise, gift cards, charity and other awards than miles.  Oh, and your miles never expire.